Engineering group Weir sees bright future for mining as 2024 orders tick up
Weir Group said it is on track to reduce company costs by £60m and grow operating margin to 20 per cent by 2026.
Engineering specialists Weir Group has said demand for its speciality mining equipment will endure as the sector undergoes its sustainability journey.
The look-ahead came as the company today reported its first quarter results for 2024, which showed a four per cent growth in total aftermarket orders and the commissioning of a new foundry in China to build essential wear and replacement mining products (ESCO).
The company added that it is on track with its Performance Excellence program, which seeks to reduce company costs by £60m and grow operating margin to 20 per cent by 2026.
The original equipment order rate is still down comparatively year-on-year, with slides of nine per cent and 16 per cent across the Minerals, ESCO and total group divisions.
But the slide has slowed somewhat, with all three divisions ticking up from the fourth quarter in 2023.
The engineering house anticipates robust demand for mining spares and brownfield solutions, underpinning a positive outlook for sustainable mining operations.
The company noted that current trends in original equipment continue to be dominated by high levels of activity in small brownfield projects to drive optimisation and tackle sustainability challenges on existing mines.
This translated into original equipment orders that were stable sequentially on Q4 2023 and down against a strong prior year comparative, up 22 per cent, but at historically high levels on an annualised basis.
Phasing of operating profit in 2024 is expected to be in line with typical seasonal patterns and Weir Group’s operating margins are expected to increase year on year and sequentially throughout the year.
Looking ahead, the group said: “The long-term fundamentals for mining and our business are highly attractive, underpinned by de-carbonisation and the energy transition, GDP growth, and the transition to sustainable mining.
“We have a clear strategy to grow ahead of our markets, with specific initiatives underpinning our ambition to deliver through-cycle mid-to-high single digit percentage revenue growth at sustainably higher margins.”
John Stanton, chief executive officer, added: “I’m pleased with the strength of our performance in the first quarter, 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.
“With further progress in our Performance Excellence programme, we are on track to deliver our 2024 guidance of growth in revenues, profits and operating margins and further ahead the opportunity for Weir to continue to deliver compounding growth and margin expansion is compelling.”
