Engineering group benefits from strong Minerals operation
Engineering group Weir has benefited from a strong performance by its minerals operation, which has a key European base in Derby.
In its full year results, the group said the Minerals division grew orders ahead of sustaining capital spending and increased its order book by spending more time on customers’ sites and investing in additional sales, project and product management experts in addition to opening eight new service centres.
The strong performance helped the overall group remain strong as it looked to shore up declines in its Flow Control division.
Group revenue rose 28% (19% at constant currency) to £2,356m (2016: £1,845m), with pre-tax profit up 47% (32%) to £250m (2016: £170m).
Minerals orders were up 11%, while it also saw consistently strong aftermarket growth and increased quotation activity.
During the year, it said the Minerals division reconfigured its manufacturing facilities and supply chain to increase efficiency ahead of the anticipated upturn in the mining capital cycle.
In total, the Minerals operation saw a 16% increase in revenue to £1,287m (2016: £1,112m), with operating profit rising 5% to £227m (2016: £217m).
In outlook, it said miners were expected to increase sustaining capital expenditure in 2018, supporting global ore production growth.
“Assuming supportive market conditions continue, it is anticipated the division will deliver moderately higher constant currency revenues and slightly higher full year operating margins, with performance supported by both the strong order book and investment in growth initiatives in 2017,” it said.
Commenting on the results, Jon Stanton, CEO, said: “The group’s performance in 2017 reflects the strength of Weir’s leadership positions in our core markets. We worked closely with customers to identify opportunities to increase their productivity and invested early to take full advantage of improving conditions.
“That proactive approach saw Minerals deliver great order momentum, underlined by the consistent growth in its high margin, cash generative aftermarket and positioned it decisively for the anticipated upturn in the mining capital cycle.
“Looking to 2018, assuming market conditions remain supportive and despite anticipated foreign exchange headwinds, we expect to deliver strong revenue and profit growth and further balance sheet deleveraging.”
