TIDMWEIR
RNS Number : 9948E
Weir Group PLC
02 November 2022
The Weir Group PLC trading update for the third quarter ended 30
September 2022(1)
Significant growth in aftermarket orders and strong
execution
Very strong demand for Weir mining equipment and spares
-- Production trends and installed base expansion supporting Group AM order growth(2) +21%
-- Integrated solutions and small brownfield activity driving Group OE order growth(2) +12%
Good operating momentum and pricing power
-- Q3 revenues up strongly year-on-year
-- Supply chain and logistics challenges easing
-- Input cost inflation mitigated; gross margins maintained
Outlook: Full year guidance unchanged
-- Strong growth in FY22 constant currency revenue and profit
-- Operating margin expansion in line with prior guidance
-- 80-90% free operating cash conversion
Jon Stanton, Chief Executive Officer, commented:
"The Group performed strongly in the third quarter,
significantly increasing orders and delivering sequential revenue
growth, while mitigating the impacts of inflation. Demand for our
aftermarket spares was particularly strong, reflecting the highly
resilient nature of our business, as miners continue to maximise
ore production. We also made good progress on our strategic growth
initiatives, with increasing customer demand for our digital
offerings and solutions for more sustainable mining.
Moving into the fourth quarter, supply chain challenges are
easing, we have strong operating momentum and a record order book.
Our FY22 guidance for strong revenue and profit growth, operating
margin expansion and 80-90% free operating cash conversion is
unchanged."
Third quarter review
Group
Conditions in mining markets were highly supportive through the
quarter, with commodity prices remaining well above miners' cost to
produce and physical inventories tightening further. These factors
caused our customers to maximise ore production driving very strong
demand for mining spares and expendables. Demand was good across
all regions, with particular strength in South America as miners
maximised copper production, and also in North America as the
re-shoring of production to the US and the recent resurgence in
activity in Canadian oil sands continued.
Large mining expansion projects remained slow to convert with
demand for OE driven by the growing focus on de-bottlenecking,
small expansions and sustainability projects at existing mines.
Within infrastructure, demand in the US, which is by far our
largest non-mining market, was stable at high levels, while demand
in Europe continued to decline.
Group orders(2) in the quarter were +19%, with AM orders(2) +21%
and OE orders(2) +12%.
The Group's book-to-bill was 1.02, reflecting growth in orders
across both divisions and strong operational execution.
Minerals
-- Orders (2) +21%: AM orders (2) +25%; OE orders (2) +13%
-- Revenues strongly ahead of prior year and sequentially higher than Q2
Demand for AM was exceptionally strong in the quarter, with
underlying production activity complemented by orders for
commissioning spares as a number of recent OE projects started
operating, growing our installed base further. Sequential movement
in orders reflects typical seasonal patterns, with a number of
multi-period orders booked in Q2.
In OE, demand was primarily driven by orders to de-bottleneck or
expand existing mines. This included GBP16m of orders for pumps for
high-grade nickel applications in Indonesia, and a GBP12m order for
pumps and cyclones for a copper concentrator in Uzbekistan. We also
booked a GBP6m order for a Terra-flowing(TM) solution for a
tailings plant in Mexico, which will increase water recovery and
eradicate the need for a tailings dam.
ESCO
-- Orders (2) +13%
-- Revenues strongly ahead of prior year and sequentially higher than Q2
Orders reflected strong demand from mining customers, with
mining orders growing sequentially from Q2. Demand was particularly
strong in South America, and also in Australia and Africa where the
Division continues to gain market share. Orders include a good
contribution from Motion Metrics and Carriere Industrial Supply,
both of which continue to perform ahead of our initial
expectations, and also reflect growing traction with our mining
attachments proposition.
Outlook
Our FY22 guidance for strong constant currency revenue and
profit growth, operating margin expansion and 80-90% free operating
cash conversion is unchanged.
Looking further ahead, conditions in mining markets are strong
and the long-term fundamentals are highly attractive. We are yet to
see whether current macro-economic and geopolitical conditions will
impact mining markets; in our base case scenario we are assuming
conditions will be supportive, with AM growth rates consistent with
our through-cycle targets and traction in small to medium sized OE
projects continuing. In infrastructure markets, we expect activity
in North America to remain stable, with weak demand continuing in
Europe.
Net debt
Net debt increased in the quarter primarily reflecting
translational foreign exchange on US$ denominated debt, while as
expected, our leverage ratio remained in line with that reported at
30 June 2022.
Spotlight capital markets webinar: Sustainabilty and
technology
We will be holding a virtual event on the afternoon of 30
November 2022 (UK time) highlighting our sustainability strategy
and technology roadmap to deliver on our commitment to smart,
efficient and sustainable mining.
Notes:
1. Financial information is given for the three months ended 30
September 2022 and relates to continuing operations.
2. Orders are reported on a constant currency basis at September
2022 average exchange rates.
Analyst and investor conference call
A conference call for analysts and investors will be held at
0800 GMT on Wednesday 2 November 2022 to discuss this statement.
Participants can join the call by registering in advance by
visiting www.global.weir/investors and following the link on the
page. A recording of this conference call will be available until
Friday 2 December 2022.
Enquiries:
Investors: Edward Pears +44 (0) 141 308 3725
Media: Sally Jones +44 (0) 141 308 3666
Citigate Dewe Rogerson: +44 (0) 207 638 9571
Kevin Smith Weir@citigatedewerogerson.com
-------------------------------
About The Weir Group PLC
Founded in 1871, The Weir Group PLC is one of the world's
leading engineering businesses with a purpose to make its mining
and infrastructure customers' operations more sustainable and
efficient. Weir's highly engineered technology enables critical
resources to be produced using less energy, water and waste while
reducing customers' total cost of ownership. The Group is ideally
positioned to benefit from structural trends that support long-term
demand for its technology including the need for more essential
metals to support economic development and carbon transition. The
Group has c.11,000 employees operating in over 60 countries with a
presence in every major mining region of the world. Find out more
at www.global.weir .
Weir's ordinary shares trade on the London Stock Exchange
(ticker: WEIR LN) and its American Depositary Receipts trade
over-the-counter in the USA (ticker: WEGRY).
Appendix 1 - Continuing operations(1) quarterly order trends
Reported growth Like-for-like growth(2)
-------------------- ----------------------------------------------- ------------------------------
2021 2021 2021 2021 2022 2022 2022 2021 2022 2022 2022
Division Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
-------------------- ----- ----- ----- ----- ----- ----- ----- ------ ------ ------ ------
Original Equipment 66% 50% 71% 9% -18% -3% 13% 9% -18% -3% 13%
Aftermarket -1% 9% 16% 29% 23% 18% 25% 29% 23% 18% 25%
Minerals 15% 20% 30% 23% 9% 11% 21% 23% 9% 11% 21%
-------------------- ----- ----- ----- ----- ----- ----- ----- ====== ====== ====== ======
Original Equipment 76% 17% 65% -9% -17% 98% -6% -9% -17% 98% -6%
Aftermarket -2% 31% 34% 40% 37% 19% 14% 39% 31% 9% 5%
ESCO 2% 30% 36% 37% 32% 23% 13% 36% 27% 13% 4%
-------------------- ----- ----- ----- ----- ----- ----- ----- ------ ------ ------ ------
Original Equipment 67% 48% 71% 8% -17% 2% 12% 8% -17% 2% 12%
Aftermarket -2% 14% 21% 32% 28% 18% 21% 32% 26% 15% 18%
Continuing
Ops 11% 22% 31% 26% 15% 14% 19% 26% 14% 12% 17%
-------------------- ----- ----- ----- ----- ----- ----- ----- ------ ------ ------ ------
Book-to-bill 1.22 1.20 1.14 1.01 1.22 1.13 1.02 1.01 1.21 1.14 1.02
-------------------- ----- ----- ----- ----- ----- ----- ----- ------ ------ ------ ------
Quarterly orders(3) GBPm Like-for-like orders(2,3)
-------------------- ----------------------------------------------- --------------------------------
2021 2021 2021 2021 2022 2022 2022 2021 2022 2022 2022
Division Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
-------------------- ----- ----- ----- ----- ----- ----- ----- ------- ------- ------ ------
Original Equipment 136 156 131 123 113 151 149 123 113 151 149
Aftermarket 260 307 272 324 320 363 340 324 320 363 340
Minerals 396 463 403 447 433 514 489 447 433 514 489
-------------------- ----- ----- ----- ----- ----- ----- ----- ======= ======= ====== ======
Original Equipment 12 7 11 7 10 15 11 7 10 15 11
Aftermarket 128 135 140 155 175 160 159 154 168 146 146
ESCO 140 142 151 162 185 175 170 161 178 161 157
-------------------- ----- ----- ----- ----- ----- ----- ----- ------- ------- ------ ------
Original Equipment 148 163 142 130 123 166 160 130 123 166 160
Aftermarket 388 442 412 479 495 523 499 478 488 509 486
Continuing
Ops 536 605 554 609 618 689 659 608 611 675 646
-------------------- ----- ----- ----- ----- ----- ----- ----- ------- ------- ------ ------
1. Continuing operations excludes the Oil & Gas Division,
which was sold to Caterpillar Inc. in February 2021 and the
Saudi-Arabian joint venture which was sold in June 2021.
2. Like-for-like excludes the impact of Motion Metrics acquired
on 30 November 2021 and Carriere Industrial Supply Limited acquired
on 8 April 2022.
3. Restated at September 2022 average exchange rates.
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END
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