Chief Executive Officer, The Weir Group PLC (stepping down 1 Aug 2026), The Weir Group PLC (Weir Minerals division)
Jon Stanton - Weir Group Half Year Results 2022
Weir Group CEO Jon Stanton discusses the positive start made to 2022 and our Half Year Results.
About Jon Stanton
In a November 2021 speech at a CBI event during the COP26 conference in Glasgow, Jon Stanton, then CEO of The Weir Group, discussed the company's approach to reaching net-zero emissions. Stanton stated that "this is now a question of how not why" regarding climate action, and argued that "there needn't be tension between people profit and the planet." He described Weir as an engineering business focused on solving customer problems through innovation, and said the company had put sustainability at the heart of its strategy. Stanton called for greater collaboration between business, government, capital markets, academia, and citizens to address climate change. He noted that Weir was doubling R&D spending, working with universities, and using artificial intelligence to identify innovations. Stanton also urged governments to support and reward businesses investing in sustainability, and called for consistent global standards to reduce administrative burdens. He expressed a personal concern about passing the climate problem to future generations, and said he wanted to see more women and girls as part of the solution.
Transcript (8 segments)
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Jon Stanton0:04
Hello everyone, I'd like to update you on Weir's results for the first half of 2022. We've delivered record aftermarket orders and I'm pleased with how we've built momentum across the business and executed well in a complex operating environment. I'd like to thank my colleagues across the group who made this strong performance possible, and I'm particularly pleased this was all achieved while maintaining our excellent safety performance.
Conditions in mining markets have been extremely favorable as high commodity prices are incentivizing miners to maximize production, driving demand for both our original equipment and aftermarket products. This increased demand is against a backdrop of rising inflation, supply chain bottlenecks, and continued COVID-19 related disruptions. But we have managed these complexities successfully and executed strongly, with good progress towards our strategic and financial targets.
Following the sale of our oil and gas business, 2022 is our first full year as a focused mining technology company. Our potential for growth and margin expansion are becoming ever clearer, and we've reached an inflection point where we can drive more value by becoming leaner and efficient. That's why today I'm excited to be launching a new business transformation program to realize that value and give us a scalable and efficient platform that will underpin our future growth.
The program will deliver 30 million pounds of annualized savings by 2025, underpinning our 2023 operating margin target of 17%. And as the full benefits are realized, we expect operating margins to expand beyond 17% thereafter. Looking ahead, the long-term opportunities in front of us are compelling. The macro trends of urbanization and population growth, coupled with the increasing acceleration of the transition to cleaner energy, will drive significant demand for metals like copper, iron ore, and gold, which are our biggest exposures.
The mining industry is on the cusp of unprecedented change, managing the dual challenges of insufficient supply of the metals needed in the drive to net zero and declining ore grades while at the same time reducing their environmental footprint. All of which plays to our strengths as a mining technology business. Technology is at the heart of our engineered solutions for customers. We're investing in research and development to develop more sustainable solutions. We're accelerating our digital capabilities, and we're working collaboratively with our customers to develop whole mine solutions that make mining smarter, more efficient, and sustainable.
You can see the fundamental strength of our business and positioning reflected in today's results. Order growth was very strong, up 14% across the group. We saw record aftermarket orders during the period, up 23%, driven by production trends and commodity prices. Original equipment orders were up 18% excluding large orders in the prior year, as customers continue to invest in our integrated and sustainable solutions. Our strong execution is reflected in revenue growth of 18% to nearly 1.1 billion pounds, and an operating profit of 168 million pounds, which was up 15%. So all in all, a very pleasing result, and this confidence in our performance and strategy is reflected in the announcement today of an interim dividend of 13.5 pence, an increase of 17%.
Conditions in mining are positive. We go into the second half of the year with a strong order book and operating momentum, and continue to expect to deliver strong growth in constant currency revenue and profit for the year, with operating profit towards the upper end of the range of current analysts' expectations. We expect sequential operating margin expansion in the second half as we make good progress towards our 2023 target of 17%.
Looking further ahead, our position as a focused mining technology business puts us at the heart of a multi-decade growth opportunity as the global mining industry delivers more of the essential metals for the energy transition and decarbonization, and does that in a more efficient and sustainable way. So as we move into the second half, I'm excited about our prospects and confident in our ability to deliver our medium-term targets as a high-quality mining technology business with strong market positions and a clear strategy to deliver long-term sustainable growth. Thank you very much for listening, and I look forward to updating you again at the end of the year.