Weir Group Plc · LSE:WEIR
Weir — The Weir Group — FY2023 Earnings Presentation
50 slides from Weir's earnings presentation, Feb 29, 2024
Slide 1: 2023 Full Year Results
2023 Full Year Results 29 February 2024
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS 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 Group”) financial position, business strategy, plans (in
Slide 3: Jon Stanton, Chief Executive Officer
CHIEF EXECUTIVE OFFICER JON STANTON 3 Full Year Results 2023
Slide 4: Compelling Value Creation Opportunity
COMPELLING VALUE CREATION OPPORTUNITY Focused mining Multi-decade market Performance Excellence technology leader with opportunity driven by transformation programme unique capabilities and demand for critical metals and delivers compounding high barriers to entry adoption of new technologies financ
Slide 5: Our Commitments to Stakeholders
OUR COMMITMENTS TO STAKEHOLDERS GROWTH MARGINS RETURNS RESILIENCE SUSTAINABILITY Converting Providing Outgrowing Expanding Delivering for earnings into resilience and our markets our margins people and planet cash and returns predictability Mid to high single 20% operating profit 90-100% free operat
Slide 6: Delivering on Our Commitments in 2023
DELIVERING ON OUR COMMITMENTS IN 2023 GROWTH MARGINS RETURNS RESILIENCE SUSTAINABILITY Converting Providing Outgrowing Expanding Delivering for earnings into resilience and our markets our margins people and planet cash and returns predictability 9% +140bps +280bps 85% 23% YoY growth1 Operating YoY
Slide 7: Ed Pears, Head of Investor Relations
HEAD OF INVESTOR RELATIONS ED PEARS 7 Full Year Results 2023
Slide 8: Strong Financial Performance in 2023
STRONG FINANCIAL PERFORMANCE IN 2023 Orders1 Revenue1 £2.6bn stable £2.6bn +9% Operating profit1,2 Operating margin1,2 £459m +18% 17.4% +140bps Profit before tax2,5 Free operating cash conversion3 £411m +18% 85% -2pp Book-to-bill Statutory profit EPS2 ROCE5 Net debt: Full year after tax5 EBITDA4 div
Slide 9: Minerals: Strong Growth and Execution
MINERALS: STRONG GROWTH AND EXECUTION High levels of mining activity, installed base expansion Orders1 £m OE AM • AM volume growth in hard rock mining 2,000 • Contribution from pricing; impact normalised through H2 £1,895m stable 71% 73% 1,000 • Reduced orders from oil sands and non-repeat of Russia
Slide 10: ESCO: Strong Execution
ESCO: STRONG EXECUTION Robust demand in mining Orders1 £m • High levels of mining activity 800 • Contribution from pricing; impact normalised through H2 £690m -2% 400 704 690 • Strong share gains in mining attachments 0 • Infrastructure demand stable through the year, but below PY peak 2022 2023 • Q
Slide 11: 2023 Operating Margin +140bps; 17% Target Exceeded
2023 OPERATING MARGIN1 +140BPS; 17% TARGET EXCEEDED 2024 and beyond Performance Excellence Operating leverage +20bps +170bps Translational FX 0bps -70bps +20bps Operating 17.4% 16.0% 16.0% leverage Pricing Operational efficiencies 1. Continuing operations, profit figures before adjusting items. 11 F
Slide 12: Exceptional Items and Pensions
EXCEPTIONAL ITEMS AND PENSIONS £22m exceptional charge £m 2023 2022 • Net credit of £8m related to wind down of Russia operations Exceptional items • Performance Excellence exceptional costs of £29m; cash outflow of Russia operations wind down 8 (44) £14m Performance Excellence (29) (3) £68m other a
Slide 13: Strong Execution Drives Cash Generation and Returns
STRONG EXECUTION DRIVES CASH GENERATION AND RETURNS Operating cash flow £526m, +17% £m 2023 2022 Profit growth and efficient working capital management Operating cash flow pre working capital 554 497 Working capital efficiency; 21.3% of sales Working capital cash flows (28) (49) Process optimisation
Slide 14: Strong Balance Sheet
STRONG BALANCE SHEET Free cash inflow of £238m Free cash flow £m 2023 2022 • £116m net cash inflow after dividends, acquisitions and exceptional Free operating cash flow 392 342 items Net interest (40) (45) • Net debt decreased by £107m Tax (104) (93) • Net debt to EBITDA 1.1x on a lender covenant b
Slide 15: 2024 Full Year Financial Guidance
2024 FULL YEAR FINANCIAL GUIDANCE Based on February FX rates expected full year Capex and lease spend c.£120m operating profit headwind of £19m Corporate costs broadly in line with 2023 Free operating cash conversion 90-100% Exceptional cash outflow c.£40m to support Interest costs marginally lower
Slide 16: Key Financial Messages
KEY FINANCIAL MESSAGES • High levels of activity in mining markets and installed base ONE expansion driving demand for AM • Continued momentum in demand for OE solutions • Strong execution; revenue and profit growth • Margin1,2 expansion +140bps, despite mix headwind TWO • Cash conversion of 85% • W
Slide 17: Jon Stanton, Chief Executive Officer
CHIEF EXECUTIVE OFFICER JON STANTON 17 Full Year Results 2023
Slide 18: Our Strategic Objectives
2023 Strategic progress People Customer Technology Performance OUR STRATEGIC OBJECTIVES PEOPLE CUSTOMER TECHNOLOGY PERFORMANCE Deliver on zero harm for our Outgrow markets through Grow pipeline of Drive clean, lean and agile people and the environment the cycle with robust VOC transformational solut
Slide 19: A Safe Workplace and Purpose-Driven Culture
2023 Strategic progress People Customer Technology Performance A SAFE WORKPLACE AND PURPOSE-DRIVEN CULTURE Deliver on Accelerate purpose Create talent and Zero Harm driven culture capabilities for the future TIR1 flat year-on-year; remains Percentage female Continued to build digital world-class in
Slide 20: Minerals: Outgrowing Our Markets – 2023 Progress
2023 Strategic progress People Customer Technology Performance MINERALS: OUTGROWING OUR MARKETS – 2023 PROGRESS Strong year-on-year growth in aftermarket comminution orders Comminution Production commenced at Iron Bridge Synertrex®: Launched new Intelli-solutions; >60 sites now connected Digital sol
Slide 21: Minerals: Customer Case Study
2023 Strategic progress People Customer Technology Performance MINERALS: CUSTOMER CASE STUDY SYNERTREX® ENHANCES CYCLONE PERFORMANCE TO OPTIMISE MINERAL SEPARATION CHALLENGE SOLUTION OUTCOMES Major copper mine Synertrex® enabled Customer: Separation in the US wanted to Cavex® cyclone efficiency incr
Slide 22: ESCO: Outgrowing Our Markets – 2023 Progress
2023 Strategic progress People Customer Technology Performance ESCO: OUTGROWING OUR MARKETS – 2023 PROGRESS Digital solutions Completed successful field trials of ore characterisation technology Delivered year-on-year growth in Motion MetricsTM revenue Surface mining buckets Strong market share gain
Slide 23: ESCO: Customer Case Study
2023 Strategic progress People Customer Technology Performance ESCO: CUSTOMER CASE STUDY MOTIONMETRICSTM ENABLES SMART, EFFICIENT AND SUSTAINABLE MINING CHALLENGE SOLUTION OUTCOMES Large iron ore mine Motion MetricsTM Customer: Less plant downtime in Western Australia latest generation from lost GET
Slide 24: Delivering Performance Excellence
2023 Strategic progress People Customer Technology Performance DELIVERING PERFORMANCE EXCELLENCE UPGRADED TARGETS 2023 UPDATE: STRONG PROGRESS £60m Optimising Driving lean Creating service centres philosophy Weir Business and facilities Launched new lean Services Absolute savings Completed operating
Slide 25: Integrated Sustainability Strategy
2023 Strategic progress People Customer Technology Performance INTEGRATED SUSTAINABILITY STRATEGY GOOD PROGRESS IN 2023 MATERIALITY ASSESSMENT EVOLVES SUSTAINABILITY STRATEGY Absolution reduction 23% in Scope 1 & 2 emissions1 Emissions reduction targets approved by SBTi; retained place on CDP ‘A Lis
Slide 26: Compelling Value Creation Opportunity
Long-term opportunity Market growth Business model Growth initiatives Performance Excellence COMPELLING VALUE CREATION OPPORTUNITY GROWTH Performance Excellence Mid to high single digit % Technology organic revenue growth focused growth Through the cycle initiatives Weir compounding z Market busines
Slide 27: Strong Structural Dynamics in Mining
Long-term opportunity Market growth Business model Growth initiatives Performance Excellence STRONG STRUCTURAL DYNAMICS IN MINING More metals needed for Growth through brownfield and / Net Zero Focus on technology Miners pursuing growth; significant or greenfield benefits Weir led productivity suppl
Slide 28: Business Model Drives Compounding Growth
Long-term opportunity Market growth Business model Growth initiatives Performance Excellence BUSINESS MODEL DRIVES COMPOUNDING GROWTH ORIGINAL EQUIPMENT c.20% AFTERMARKET c.80% Large installed base of equipment Drives aftermarket revenues • Used in high wear applications • Spare parts and expendable
Slide 29: Investing in Technology for Sustainable Mining
Long-term opportunity Market growth Business model Growth initiatives Performance Excellence INVESTING IN TECHNOLOGY FOR SUSTAINABLE MINING Integrated technology and R&D strategy Complemented by Weir sustainable solutions for mining Protecting Addressing customers’ Strategic TerraflowingTM and taili
Slide 30: Accelerating Sustainable Mining
Long-term opportunity Market growth Business model Growth initiatives Performance Excellence ACCELERATING SUSTAINABLE MINING Avoided First study Global interest Simplified redefined mill circuit emissions of its kind from study confirms for a mining customers, sustainability use case governmental be
Slide 31: Our Journey to Sustainably Higher Margins
Long-term opportunity Market growth Business model Growth initiatives Performance Excellence OUR JOURNEY TO SUSTAINABLY HIGHER MARGINS OPERATING PROFIT MARGIN PORTFOLIO GROWTH AND TRANSFORMATION OPTIMISATION 20% Upgraded target 17.4% Operating £60m absolute leverage cost savings 16% in 2026 15.3% Op
Slide 32: Outlook: Growing Demand for Aftermarket in 2024
OUTLOOK: GROWING DEMAND FOR AFTERMARKET IN 2024 2022 TO 2023 AM ORDER BRIDGE ILLUSTRATIVE 2023 TO 2024 AM ORDER BRIDGE Not to scale Russia 01 Oil sands 02 Ore production Infrastructure Ore production forecast to grow ~1.5% in 20241 01 Installed base expansion c.30% of OE value in spares p.a. Iron Br
Slide 33: Outlook: Growth and Margin Expansion in 2024
OUTLOOK: GROWTH AND MARGIN EXPANSION IN 2024 POSITIVE MARKET CONDITIONS OUTLOOK FOR 2024 Aftermarket: Demand increasing We expect another year of growth and margin expansion Installed base expansion • Strong order book and positive mining markets Hard rock mining: positive ore production trends • Gr
Slide 34: Delivering on Our Commitments
DELIVERING ON OUR COMMITMENTS ONE Strong execution TWO Excellent strategic progress THREE Medium-term targets on track FOUR Positive ore production trends in mining markets FIVE 2024: Positioned for growth and margin expansion 34 Full Year Results 2023
Slide 35: Compelling Value Creation Opportunity
COMPELLING VALUE CREATION OPPORTUNITY Focused mining Multi-decade market Performance Excellence technology leader with opportunity driven by transformation programme unique capabilities and demand for critical metals and delivers compounding high barriers to entry adoption of new technologies financ
Slide 36: Q&A
Q&A 36 Full Year Results 2023
Slide 37: Appendix
APPENDIX 37 Full Year Results 2023
Slide 38: Continuing Operations
CONTINUING OPERATIONS £m H1 20231 H2 2023 2023 20221 Growth1 OE orders 297 279 576 591 -3% AM orders 1,018 991 2,009 1,999 0% Total orders 1,315 1,270 2,585 2,590 0% OE revenue 285 322 607 490 24% AM revenue 995 1,034 2,029 1,933 5% Total revenue 1,280 1,356 2,636 2,423 9% Book-to-bill 1.03 0.94 0.9
Slide 39: Minerals
MINERALS £m H1 20231 H2 2023 2023 20221 Growth1 OE orders 262 252 514 547 -6% AM orders 700 681 1,381 1,339 3% Total orders 962 933 1,895 1,886 0% OE revenue 257 292 549 447 23% AM revenue 676 712 1,388 1,288 8% Total revenue 933 1,004 1,937 1,735 12% Book-to-bill 1.03 0.93 0.98 1.09 Adjusted operat
Slide 40: ESCO
ESCO £m H1 20231 H2 2023 2023 20221 Growth1 OE orders 35 27 62 44 41% AM orders 318 310 628 660 -5% Total orders 353 337 690 704 -2% OE revenue 28 30 58 43 34% AM revenue 319 322 641 645 -1% Total revenue 347 352 699 688 2% Book-to-bill 1.02 0.96 0.99 1.02 Adjusted operating profit2 58 64 122 109 11
Slide 41: Quarterly Order Trends – Continuing Operations
QUARTERLY ORDER TRENDS – CONTINUING OPERATIONS Reported growth 2022 Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2023 Q1 2023 Q2 2023 Q3 2023 Q4 2023 FY Original Equipment -18% -3% 13% 19% 2% 20% -12% -10% -15% -6% Aftermarket 23% 18% 25% 6% 18% 5% 5% 1% 2% 3% Minerals 9% 11% 21% 10% 13% 9% 0% -2% -3% 0% Orig
Slide 42: Quarterly Order Trends – Continuing Operations
QUARTERLY ORDER TRENDS – CONTINUING OPERATIONS Quarterly orders1 (£m) 2022 Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2023 Q1 2023 Q2 2023 Q3 2023 Q4 2023 FY Original Equipment 111 148 144 144 547 132 130 129 123 514 Aftermarket 313 356 333 337 1,339 329 371 337 344 1,381 Minerals 424 504 477 481 1,886 461
Slide 43: Orders by End Market and Geography
ORDERS BY END MARKET AND GEOGRAPHY – CONTINUING OPERATIONS Orders by end market Minerals ESCO 2023 Total 20221 Total Mining 1,488 427 1,915 1,860 Oil & Gas 109 71 180 223 Infrastructure 39 169 208 221 General Industrial 188 23 211 228 Other 71 - 71 58 Continuing Operations 1,895 690 2,585 2,590 Orde
Slide 44: 2023 Order Bridges – As Reported
2023 ORDER BRIDGES – AS REPORTED H1 H2 Full Year Group orders (£m) OE AM Total OE AM Total OE AM Total 2022 – as reported 285 997 1,282 320 1,042 1,362 605 2,039 2,644 Organic 5% 0% 1% -9% -1% -3% -3% 0% 0% Structure 0% 1% 1% 0% 0% 0% 0% 0% 0% Currency 1% 3% 2% -5% -5% -5% -2% -1% -2% Total 6% 4% 4%
Slide 45: Working Capital
WORKING CAPITAL INVENTORY TRADE RECEIVABLES 700 3 450 80 2.7 72 2.4 2.5 600 2.3 400 62 60 2 55 350 500 1.5 Continuing 40 Continuing £m £m 1 Operations 300 Operations 400 20 0.5 250 Inventory Turns Debtor Days 300 0 200 0 2021 2022 2023 2021 2022 2023 WORKING CAPITAL TRADE PAYABLES 600 30 700 27.9 55
Slide 46: Foreign Exchange by Currency
FOREIGN EXCHANGE BY CURRENCY 2022 Revenue £m 2022 Adjusted operating profit1 £m Currency At 2022 rates FX At 2023 rates At 2022 rates FX At 2023 rates US Dollar 1,087 (6) 1,081 193 (1) 192 Australian Dollar 374 (19) 355 55 (2) 53 Canadian Dollar 240 (10) 230 63 (2) 61 Euro 79 1 80 24 1 25 Chilean Pe
Slide 47: Foreign Exchange by Division
FOREIGN EXCHANGE BY DIVISION 2022 Revenue £m 2022 Adjusted operating profit1 £m Division At 2022 rates FX At 2023 rates At 2022 rates FX At 2023 rates Minerals 1,780 (45) 1,735 324 (6) 318 ESCO 692 (4) 688 110 (1) 109 Corporate costs — — — (39) — (39) Continuing operations 2,472 (49) 2,423 395 (7) 3
Slide 48: Foreign Exchange Headwind in 2024 at Current Rates
FOREIGN EXCHANGE HEADWIND IN 2024 AT CURRENT RATES FY 2023 Revenue £m FY 2023 Adjusted operating profit1 £m Currency At 2023 rates FX At 2024 rates2 At 2023 rates FX At 2024 rates2 US Dollar 1,109 (21) 1,088 166 (3) 163 Australian Dollar 442 (11) 431 80 (2) 78 Canadian Dollar 273 (4) 269 79 (1) 78 E
Slide 49: Exchange Rates
EXCHANGE RATES The principal exchange rates applied in the preparation of the financial statements were as follows: 2022 2023 2022 2023 Currency Average FX rate Average FX rate Balance sheet rate Balance sheet rate US Dollar 1.24 1.24 1.21 1.28 Australian Dollar 1.78 1.87 1.77 1.87 Canadian Dollar 1
Slide 50: Find Out More at global.weir
FIND OUT MORE AT GLOBAL.WEIR 50 Full Year Results 2023