TIDMWEIR
RNS Number : 9818W
Weir Group PLC
29 April 2021
The Weir Group PLC trading update for the first quarter ending
31 March 2021(1)
Good order growth as mining and infrastructure markets
strengthen
http://www.rns-pdf.londonstockexchange.com/rns/9818W_1-2021-4-28.pdf
-- Increase in Group orders(2) from continuing operations(3) of 11%
o 67% increase in original equipment (OE) orders with project
pipeline strength continuing
o Aftermarket (AM) orders down 2% reflecting residual Covid
disruption to ore production
-- Up 7% sequentially from Q4 2020 as activity continued to
normalise
-- Revenues stable reflecting highly resilient AM performance and OE project timing
-- Pipeline and bid conversion developing positively, particularly for sustainable solutions
o GBP36m Q1 order for energy-saving High Pressure Grinding Rolls
(HPGRs) and screens
o GBP32m April order for electric-powered mine de-watering
pumps
-- 2021 Outlook: G rowth in constant currency profits in line with current market expectations
Jon Stanton, Chief Executive, commented:
"The Group has had a good start to the year against the backdrop
of ongoing Covid challenges. As expected, conditions continued to
improve in both mining and infrastructure markets reflecting
increasing customer confidence in a broad-based economic recovery
and near record prices for commodities essential to growth and
carbon transition. This was reflected in continued positive
development in our project pipeline and improving order conversion
of our early cycle product lines and technologies that deliver
significant sustainability benefits.
Looking to the full year, we continue to expect to deliver
growth in full year constant currency profits in line with current
market expectations."
First quarter review - Continuing Operations
Conditions in mining markets continued to improve in the first
quarter supported by commodity prices that remained close to
multi-year highs for the Group's largest exposures of copper, iron
ore and gold. Customers focused on maximising production and as a
result, ore production volumes and machine utilisation continued to
normalise, although remained below pre-Covid levels in some regions
where the ongoing pandemic is restricting customer staffing levels.
Demand was strongest in North America, Central Asia and Africa, but
more subdued in Asia-Pacific and South America, with Australia
affected by adverse weather and Chile by the build-up of safety
stocks in Q1 2020 as the Covid-19 pandemic started to have an
impact. Third-party access to sites improved overall, particularly
in those regions with advanced Covid-19 vaccination programmes and
low infections levels, but access remains an ongoing issue in some
markets. Project quotation activity continued to be strong and
while the rate of conversion remained slower than usual there was
an acceleration in orders for our longer-lead time and therefore
earlier cycle technologies such as GEHO(R) positive displacement
pumps and Enduron(R) HPGRs. This was principally focused on
brownfield expansions across a range of commodities, with
greenfield activity remaining more limited.
Infrastructure markets, particularly sand and aggregates in
North America and Europe, began to recover strongly as economic
confidence increased and this was reflected in higher activity
levels and restocking in third party distribution channels.
Group orders in the first quarter were up 11%, driven by OE
which increased 67%, benefiting from a large order to supply
energy-efficient HPGRs and screens to support the expansion of
Ferrexpo's iron ore operations in the Ukraine. As expected, AM
demand was down slightly against the prior year period, reflecting
residual Covid disruptions, although continued to increase
sequentially, up 7% on Q4 2020. The Group's book-to-bill was strong
at 1.22, reflecting positive demand trends.
Operationally the Group continued to prioritise safety and
well-being with ESCO making further meaningful progress in the
first quarter. We have now completed plans for ESCO's new China
foundry which will break ground in Q3, while Minerals upgraded its
Australian foundry as part of our global initiative to optimise
production of our largest castings. Our focus on sustainable
solutions continues and we are now developing our CO2 product
footprint tool for deployment later this year. There are now c.150
programmes underway across the Group to reduce energy, water and
waste as part of our 2024 sustainability commitments and we remain
on track to complete our Scope 3 study and first evaluation of
Science Based Targets and Net Zero pathways in 2021. We are
continuing the roll-out of our field-service technology to enhance
delivery of on-site engineering and increase our installed base
data. We also launched our new global learning system which will
allow the accelerated deployment of training in areas such as
safety, lean and sustainability.
Divisional review
Minerals
-- Orders up 15%; revenues up modestly YoY
-- OE orders up 66% as bid pipeline conversions gather momentum
-- AM orders down 1% on Q1 2020 but up 3% sequentially on Q4 2020
Divisional orders increased 15% YoY supported by strong demand
for more sustainable and longer lead time solutions, particularly
the Enduron(R) range of HPGRs that reduce energy consumption in
comminution (grinding and crushing) by up to 40%. Orders in the
period included a large GBP36m contract to supply HPGRs and screens
to Ferrexpo which is expanding its capacity in the Ukraine from 32m
tonnes of iron ore pellets per year to 80m tonnes. This supported a
66% increase in OE orders which also included good demand for
GEHO(R) piston diaphragm pumps and solutions that support
debottlenecking as miners focused on productivity improvements. The
gradual easing of mine access restrictions supported the division's
Integrated Solutions strategy which is focused on offering a range
of technologies that increase mine capacity, particularly for
smaller or brownfield projects. As expected, aftermarket demand was
down slightly (-1%) YoY as a result of residual Covid challenges,
including restricted mine-site access and some customers operating
with skeleton crews. However, there was a continued improvement in
AM trends with sequential orders up 3% from Q4 2020 and the
division's book-to-bill increased to 1.27, with the growing order
book reflecting increasing conversion of the project pipeline. This
was also reflected in April where the division won a GBP32m order
in Asia-Pacific to replace a fleet of diesel-powered dewatering
pumps with electric alternatives.
ESCO
-- ESCO orders up 2%; revenues were down mid-single-digits YoY but up sequentially
-- AM down 2% YoY but up 16% sequentially
Divisional orders increased 2% against the prior year but were
up 19% sequentially, principally due to the strong recovery in
infrastructure markets. Mining activity continued to gradually
recover as customers progressively ramped up activity to rebuild
stockpiles. Conversions to the division's Nemisys(R) ground
engaging tools (G.E.T.) also continued to increase and there was
good growth in demand for the division's range of buckets,
particularly in Africa, as it broadens its addressable markets. The
division also leveraged Minerals global service network to expand
into new territories, including securing market share gains in
North Africa and Western Europe. Revenues were down
mid-single-digits against a prior year when customers were
forward-purchasing ahead of Covid-related lockdowns. The sequential
order growth from Q4 2020 was reflected in the division's
book-to-bill of 1.11, which was the highest since acquisition in
2018.
Net debt
Net debt has reduced significantly since the year end due to the
GBP256m net proceeds and GBP66m reduction in lease liabilities from
the sale of the Oil & Gas division, which completed on 1
February 2021. Excluding the impact from the sale of the Oil &
Gas division, net debt would have been higher than 31 December
2020, reflecting normal seasonal working capital patterns.
Notes:
1. Financial information is given for the three months ended 31
March 2021 and relates to continuing operations.
2. Orders are reported on a constant currency basis at Q1 2021 average exchange rates.
3. Continuing Operations excludes the Oil & Gas division
which was sold on 1 February 2021.
Analyst and investor conference call
A conference call for analysts and investors will be held at
0800 BST on Thursday 29 April 2021 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
Thursday 14 May 2021.
Enquiries:
Investors: Stephen Christie +44 (0) 141 308 3707
Media: Raymond Buchanan +44 (0) 141 308 3781
Citigate Dewe Rogerson: Chris +44 (0) 207 638 9571
Barrie / 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.
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
(constant currency)
Reported growth
-------------------- ---------------------------------
2020 2020 2020 2020 2021
Division Q1 Q2 Q3 Q4 Q1
-------------------- ----- ----- ----- ----- -----
Original Equipment -13% -9% -57% -18% 66%
Aftermarket -1% -6% -5% -3% -1%
Minerals -5% -7% -27% -8% 15%
-------------------- ----- ----- ----- ----- -----
Original Equipment 25% 16% -23% 6% 76%
Aftermarket -8% -28% -24% -2% -2%
ESCO -7% -26% -24% -2% 2%
-------------------- ----- ----- ----- ----- -----
Original Equipment -11% -8% -55% -17% 67%
Aftermarket -4% -13% -12% -3% -2%
Continuing Ops -5% -12% -26% -7% 11%
-------------------- ----- ----- ----- ----- -----
Book to Bill 1.10 1.03 0.82 0.87 1.22
-------------------- ----- ----- ----- ----- -----
Quarterly orders GBPm
-------------------- ---------------------------------
2020 2020 2020 2020 2021
Division Q1 Q2 Q3 Q4 Q1
-------------------- ----- ----- ----- ----- -----
Original Equipment 81 102 76 111 135
Aftermarket 255 272 228 244 251
Minerals 336 374 304 355 386
-------------------- ----- ----- ----- ----- -----
Original Equipment 6 6 6 7 11
Aftermarket 120 94 95 101 117
ESCO 126 100 101 108 128
-------------------- ----- ----- ----- ----- -----
Original Equipment 87 108 82 118 146
Aftermarket 375 366 323 345 368
Continuing Ops 462 474 405 463 514
-------------------- ----- ----- ----- ----- -----
1. Continuing Operations excludes the Flow Control division
which was sold in June 2019 and the Oil & Gas division which
was sold in February 2021.
Appendix 2 - Continuing Operations(1) historical quarterly order
trends
At constant currency
2019 2019 2019 2019 2019 2020 2020 2020 2020 2020 2021
Division Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1
-------------------- ----- ----- ----- ----- ------ ----- ----- ----- ----- ------ -----
Original Equipment 94 114 176 136 520 81 102 76 111 370 135
Aftermarket 259 291 242 251 1,043 255 272 228 244 999 251
Minerals 353 405 418 387 1,563 336 374 304 355 1,369 386
-------------------- ----- ----- ----- ----- ------ ----- ----- ----- ----- ------ -----
Original Equipment 5 5 8 7 25 6 6 6 7 25 11
Aftermarket 130 131 125 103 489 120 94 95 101 410 117
ESCO 135 136 133 110 514 126 100 101 108 435 128
-------------------- ----- ----- ----- ----- ------ ----- ----- ----- ----- ------ -----
Original Equipment 99 119 184 143 545 87 108 82 118 395 146
Aftermarket 389 422 367 354 1,532 375 366 323 345 1,409 368
Continuing Ops 488 541 551 497 2,077 462 474 405 463 1,804 514
-------------------- ----- ----- ----- ----- ------ ----- ----- ----- ----- ------ -----
As reported
2019 2019 2019 2019 2019 2020 2020 2020 2020 2020 2021
Division Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1
-------------------- ----- ----- ----- ----- ------ ----- ----- ----- ----- ------ -----
Original Equipment 99 118 186 142 545 83 104 78 112 377 135
Aftermarket 274 305 264 259 1,102 260 276 232 247 1,015 251
Minerals 373 423 450 401 1,647 343 380 310 359 1,392 386
-------------------- ----- ----- ----- ----- ------ ----- ----- ----- ----- ------ -----
Original Equipment 5 6 9 7 27 7 6 7 8 28 11
Aftermarket 139 140 140 111 530 129 105 101 105 440 117
ESCO 144 146 149 118 557 136 111 108 113 468 128
-------------------- ----- ----- ----- ----- ------ ----- ----- ----- ----- ------ -----
Original Equipment 104 124 195 149 572 90 110 85 120 405 146
Aftermarket 413 445 404 370 1,632 389 381 333 352 1,455 368
Continuing Ops 517 569 599 519 2,204 479 491 418 472 1,860 514
-------------------- ----- ----- ----- ----- ------ ----- ----- ----- ----- ------ -----
1. Continuing Operations excludes the Flow Control division
which was sold in June 2019 and the Oil & Gas division which
was sold in February 2021.
This information includes 'forward-looking statements'. All
statements other than statements of historical fact included in
this presentation, including, without limitation, those regarding
The Weir Group PLC's ("the Company") financial position, business
strategy, plans (including development plans and objectives
relating to the Company's products and services) and objectives of
management for future operations, are forward-looking statements.
These statements contain the words "anticipate", "believe",
"intend", "estimate", "expect" and words of similar meaning. Such
forward-looking statements involve known and unknown risks,
uncertainties and other important factors that could cause the
actual results, performance or achievements of the Company to be
materially different from future results, performance or
achievements expressed or implied by such forward-looking
statements. Such forward-looking statements are based on numerous
assumptions regarding the Company's present and future business
strategies and the environment in which the Company will operate in
the future. These forward-looking statements speak only as at the
date of this document. The Company expressly disclaims any
obligation or undertaking to disseminate any updates or revisions
to any forward-looking statements contained herein to reflect any
change in the Company's expectations with regard thereto or any
change in events, conditions or circumstances on which any such
statement is based. Past business and financial performance cannot
be relied on as an indication of future performance.
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