Weir Group PLC · LSE:WEIR
Weir — The Weir Group — FY2003 Earnings Presentation
33 slides from Weir's earnings presentation, Mar 16, 2004
Slide 1: 2003 Full Year Results
Excellent The Weir Group PLC Analysts Presentation Engineering London, 16 March 2004 Solutions 2003 Full Year Results
Slide 2: Agenda
The Weir Group PLC Excellent Engineering Solutions Agenda Introduction & Financial Highlights Sir Robert Smith Financial review Ian Boyd Input and Operational review Mark Selway Outlook Mark Selway Questions and Answers All 2
Slide 3: Financial Highlights
Excellent The Weir Group PLC Excellent The Weir Group PLC Engineering Engineering Solutions Solutions 2003 Full Year Results Financial Highlights
Slide 4: Financial Highlights 2003
The Weir Group PLC Excellent Engineering Solutions Financial Highlights 2003 Group Results 2003 Order Input Operating Profit Continuing 70 Turnover Operating profit (1) Pre-tax profit (1) 700 Operations £793.4m £63.5m £56.7m 60 600 50 500 Down 5.7% Up 2.1% Down 5.5% 40 400 30 Earnings per share (1)
Slide 5: Financial Review
Excellent The Weir Group PLC Excellent The Weir Group PLC Engineering Engineering Solutions Solutions 2003 Full Year Results Financial Review
Slide 6: Consolidated Profit & Loss Account
The Weir Group PLC Excellent Engineering Solutions Consolidated Profit & Loss Account 2003 2002 Before Before amortisation of Amortisation of amortisation of Amortisation of goodwill & goodwill & goodwill & goodwill & exceptional items exceptional items Total exceptional items exceptional items Tota
Slide 7: Consolidated Profit & Loss Account
The Weir Group PLC Excellent Engineering Solutions Consolidated Profit & Loss Account 2003 2002 Before amortisation Before amortisation of goodwill & of goodwill & exceptional items exceptional items £m £m Turnover Group Continuing Operations 690.7 685.2 Discontinued Operations - 16.0 690.7 701.2 JV
Slide 8: Profits before goodwill and exceptionals Bridge 2002 to 03
The Weir Group PLC Excellent Engineering Solutions Profits before goodwill and exceptionals Bridge 2002 to 2003 £m 2002 PBT 60.0 Increased profits: Products 2.3 Services 5.1 Associates 2.8 Reduction in interest charge 0.4 Exchange adjusted to 2003 rates 0.0 Reduced profits: Techna (4.6) Discontinued
Slide 9: Discontinued Operations
The Weir Group PLC Excellent Engineering Solutions Discontinued Operations Period consolidated Company Effective date 2003 2002 First Engineering Sold October 2002 - 9 mths Neyrfor Weir Limited Sold July 2002 - 7 mths Molded Products Sold June 2002 - 6 mths 9
Slide 10: Exceptional items
City Presentation 2001 The Weir Group PLC Excellent Engineering Solutions Exceptional items £1.7m - Gain on sale of land at Manchester £4.6m - Tax Credit – Resolution of contentious issue provided for in previous years. £6.3m 10
Slide 11: Divisional Split
The Weir Group PLC Excellent Engineering Solutions Divisional Split Turnover Operating Profit(1) Margin % 2003 2002 (2) 2003 2002 (2) 2003 2002 (2) £m £m £m £m Engineering Products 428.9 429.2 34.8 32.5 8.1% 7.6% Engineering Services 188.9 153.4 20.6 15.3 10.9% 10.0% Techna 72.9 109.1 0.8 5.4 1.1% 5
Slide 12: Effect of exchange rates
The Weir Group PLC Excellent Engineering Solutions Effect of exchange rates Profit Before Tax (1) Turnover 2003 2002 Change 2003 2002 £m £m % £m £m At 2003 rates 56.7 60.1 -5.6% 793.4 848.0 Exchange adjustment (0.1) (6.3) 2002 figures as 60.0 841.7 published Significant rates used 2003 2002 % Change
Slide 13: Pensions
The Weir Group PLC Excellent Engineering Solutions Pensions 2002 2003 2004 PROFIT AND LOSS CHARGE £000 £000 £000 Defined Benefit Plans (Estimated) Service Cost 8,204 6,238 6,226 Curtailment Credit (954) (495) - Defined Contribution Plans Contributions 4,511 4,739 5,100 CHARGE TO OPERATING PROFIT 11,
Slide 14: Pensions Continued
The Weir Group PLC Excellent Engineering Solutions Pensions Continued BALANCE SHEET Expected Dec 2003 Expected Dec 2002 Return Return % £m % £m Equities 7.8 326 7.5 265 Bonds 4.5 117 4.4 106 Property 7.3 10 7.0 15 Total assets at market value 453 386 Actuarial value of liabilities (551) (533) Defici
Slide 15: Tax Charge
The Weir Group PLC Excellent Engineering Solutions Tax Charge 2003 2002 % % Effective tax rate (1) 23.0 23.0 Tax credit on exceptional items - (22.4) Exceptional item (1) (1) – Tax provision release re prior years £4.6m (£3.4m) (8.2) (5.7) Actual tax rate 16.3 15.2 (1) Guidance for next year <25 <25
Slide 16: Tax Reconciliation
The Weir Group PLC Excellent Engineering Solutions Tax Reconciliation 2003 2002 £ ‘000 £’000 Profit on ordinary activities before tax 51,253 59,427 Weighted average standard tax rate 31.2% 30.3% Profit multiplied by average standard tax rate 15,980 17,994 Expenses not deductible for tax purposes 988
Slide 17: EPS and Dividend
The Weir Group PLC Excellent Engineering Solutions EPS and Dividend 2003 2002 Earnings per share FRS 3 basic (p) 21.0 24.7 Adjust: Goodwill amortisation 3.5 3.3 Exceptional items (3.1) (5.4) Pre Goodwill amortisation and exceptionals (p) 21.4 22.6 Average no of shares issued (m) 204.4 203.40 Dividen
Slide 18: Cash Flow Statement (£m)
The Weir Group PLC Excellent Engineering Solutions Cash Flow Statement (£m) 2003 2002 Funds generated by operations 56.8 59.7 Decrease in working capital 0.6 9.7 Cash spent on exceptional items (1.5) (1.3) Cash from operations 55.9 68.1 Interest and other income (0.3) (0.4) Taxation (7.6) (7.1) Capi
Slide 19: Net Debt Movement
The Weir Group PLC Excellent Engineering Solutions Net Debt Movement -150 Year on Year -130 Net Debt Balance -110 -90 £m -70 -146.5 -50 -95 -30 -66 1999 2000 2001 2002 2003 -10 10 1.9 0.5 Dividends Paid Dividends Paid £92m £92m 2000 2000--2003 2003 19
Slide 20: 2003 Full Year Results
Excellent The Weir Group PLC Analysts Presentation Engineering London, 16 March 2004 Solutions 2003 Full Year Results
Slide 21: Order Input by Division - Continuing Operations
The Weir Group PLC Excellent Engineering Solutions Order Input by Division - Continuing Operations (1) Consolidated 2003 2002 Variance £m £m % Minerals 225.8 201.1 12.2% Clear Liquid 146.5 162.7 (10.0)% Services 192.5 177.2 8.6% Valves 62.0 60.9 1.9% Techna 100.5 57.0 76.5% Total 727.4 658.9 10.4% (
Slide 22: Order input by geographic location
The Weir Group PLC Excellent Engineering Solutions Order input by geographic location (1) (Continuing Operations) 2003 2002 Variance £m £m % Americas 232,769 235,142 (1)% United Kingdom 167,194 123,821 35.0% Middle East / Africa 111,160 98,346 13.0% Europe & FSU 78,355 82,728 (5.3)% Australia 59,086
Slide 23: Order input by sector
The Weir Group PLC Excellent Engineering Solutions Order input by sector (1) (Continuing operations) 2003 2002 £m % £m % General industrial 127,331 17.5 131,848 20.0 Minerals processing 192,733 26.5 156,053 23.7 Oil & gas 138,766 19.1 122,186 18.5 Power generation 128,526 17.7 116,033 17.6 Water & w
Slide 24: Operational Review
The Weir Group PLC Analysts Presentation Excellent Engineering London, 16 March 2004 Solutions Operational Review
Slide 25: Key elements in our Journey to Excellence
The Weir Group PLC Excellent Engineering Solutions Key elements in our Journey to Excellence + 2001 Weir future 2003 business focus • Identified opportunities Market Attractiveness • Developed leading edge products Build on Invest to deliver to grow competitive threads sustainable success NEW NEWUNI
Slide 26: Weir Minerals Division 2003 performance
The Weir Group PLC Excellent ORDER INPUT Engineering Solutions Weir Minerals Division £226m 2003 performance Up 12.2% Sector Summary Geographic Summary 120 • Strong growth in minerals/mining • Strong growth in Former Soviet Union 180 100 • High commodity prices • Strong growth in China 160 140 • Gro
Slide 27: Weir Clear Liquids Division 2003 performance
The Weir Group PLC Excellent ORDER INPUT Engineering Solutions Weir Clear Liquids Division £146.5m 2003 performance Down 10% Sector Summary Geographic Summary • Water orders in 2002 include Middle East spares 120 • Asian power orders delivered in 2003 • Asian power orders secured in 2003 • US power
Slide 28: Weir Valves & Controls Division 2003 performance
The Weir Group PLC Excellent ORDER INPUT Engineering Solutions Weir Valves & Controls Division £62.0m 2003 performance Up 1.8% Sector Summary Geographic Summary • UK & European power markets remain soft 35 • Excellent progress in Asian power market 50 • US power market down £3.0m 30 • UK oil input i
Slide 29: Weir Services Division 2003 performance
The Weir Group PLC Excellent ORDER INPUT Engineering Solutions Weir Services Division £192.5 2003 performance Up 8.6% Sector Summary Geographic Summary • Strong growth in Middle East water projects • Continued progress in Middle East power, water 160 • Continued progress in Canada and US grows and o
Slide 30: Weir Techna Division 2003 performance
The Weir Group PLC Excellent ORDER INPUT Engineering Solutions Weir Techna Division £100.5m 2003 performance Up 76.3% Sector Summary Geographic Summary • Water sector benefits from Kindasa project 100 • UK orders include “Buzzard” and nuclear • Oil sector benefits from Encana “Buzzard” services awar
Slide 31: 2003 Weir Group Scorecard
The Weir Group PLC Excellent Engineering Solutions 2003 Weir Group Scorecard Order input growth, 700 KEY ACHIEVEMENTS expected to continue Order input growth into 2004 Order Input Continuing Operations Operating profit growth Up 10.4% 600 Operating profit growth expected to continue in 2004 500 Oper
Slide 32: Outlook
The Weir Group PLC Excellent Engineering Solutions Outlook The recent trends in currency markets, if sustained throughout the year, would adversely affect the value of overseas profits translated to Sterling. Improved global equity markets and interest rates should reduce pension costs in 2004. Our
Slide 33: Our journey to excellence
The Weir Group PLC Excellent Engineering Solutions Our journey to excellence 2001 2002 2003 2004 2005 2006 A watershed year A programme of transition Building on Potential Positioned for growth • Market review • Structure and competency • Performance benefits • Improved competitive Sector best • Com