Weir Group performs as expected in first quarter

25th Apr 2024 08:31

(Sharecast News) - Weir Group said in a trading update on Thursday that order progression in its first quarter matched expectations as it maintained its guidance for the year.

The FTSE 100 company said there had been a positive trend in customer focus on increasing minerals production, reflected in a 4% increase in aftermarket (AM) orders for minerals and a 5% increase for ESCO, driven by strong mining markets and normalised infrastructure.

Additionally, brownfield optimisation projects were ongoing, with a heightened intent to accelerate expansion projects.

Original equipment (OE) orders remained stable sequentially, consistent with the anticipated 2024 run rate, and supported by a robust project pipeline, which saw a 22% increase compared to the prior year.

The Performance Excellence programme was continuing as planned, with milestones such as the commissioning of the ESCO China foundry in March, achieved on time and below budget.

Both functional and operational efficiency activities were progressing well, the board said, in line with margin expectations.

Looking ahead, Weir said it anticipated trading to remain in line with expectations, supported by a strong order book, expansion of the installed base, and positive production trends in mining markets.

Growth in constant currency revenue, operating profit, and operating margin were expected,, with free operating cash conversion projected to be between 90% to 100%.

"I'm pleased with the strength of our performance in the first quarter," said chief executive officer Jon Stanton.

"We are delivering the technology to enable our customers to address both the demand for critical metals and the transition to more sustainable mining.

"Our aftermarket growth algorithm delivered as expected, with our significant installed base and diversification across commodities and geographies resilient against mixed commodity prices and increasing geo-political tensions."

Stanton said that with further progress in the firm's Performance Excellence programme, it was on track to deliver its 2024 guidance of growth in revenues, profits and operating margins.

"Further ahead, the opportunity for Weir to continue to deliver compounding growth and margin expansion is compelling."

At 0812 BST, Weir Group shares were down 0.2% at 1,974p.

Reporting by Josh White for Sharecast.com.