The Weir Group H1 Earnings Call Highlights

The Weir Group LON: WEIR said first-half order growth accelerated in the second quarter, supported by mining activity across copper, gold, iron ore and oil sands, while production-transfer disruptions in its Minerals division delayed some revenue and pressured margins.

The company reported an 8% year-over-year increase in orders on a constant-currency basis for the first half of 2026. Original equipment orders rose 10%, while aftermarket orders increased 8%. Revenue grew 5% on a constant-currency basis to £1.3 billion.

Management said weather-related mine-site disruption in the first quarter had reversed during the second quarter, bringing Minerals aftermarket demand back into its expected mid- to high-single-digit growth range. The group ended June with a book-to-bill ratio of 1.12 and an order book that increased by about £150 million during the half.

Margins affected by production transfers

Adjusted operating profit was stable on a constant-currency basis, but the operating margin declined by 100 basis points to 18.8%. The company attributed the decline to product mix, aftermarket demand phasing and higher costs related to the transfer of production between sites.

Late in 2025, Weir began relocating rubber-parts manufacturing to Malaysia and India and casting production to facilities in the Americas and Africa, following capacity reductions in Australia and the U.K. Management said unusual demand patterns during the first quarter and early second quarter complicated those moves, resulting in deferred deliveries and manufacturing inefficiencies.

Brian Puffer, chief financial officer, said the Minerals division faced a 130-basis-point margin headwind from mix and a further 70-basis-point impact from production-transfer delays. However, he said the company expects those factors to reverse in the second half as production is replanned and delayed orders are delivered.

“We are on track to deliver our £90 million target in cumulative Performance Excellence savings,” Puffer said, adding that the company expects to sustain operating margins above 20% for the full year.

The company said its S/4HANA program will have a smaller-than-previously-expected impact in 2026, with Puffer estimating a full-year effect of about half the previously indicated 70 to 80 basis points.

Divisional performance

Minerals orders rose 7% on a constant-currency basis, including 9% growth in original equipment and 7% growth in aftermarket orders. Revenue increased 3% to £900 million, helped by the Townley acquisition. However, operating profit fell 5% to £181 million and the division’s margin declined 170 basis points to 20.1%.

Management said Minerals won more than two-thirds of new large pump tenders during the half and succeeded in 13 of 14 competitive mill-pump trials. The company said its more than 90% success rate in pump trials reflects the performance of its technology and customer-service model. It characterized pricing conditions as low single-digit, noting customer cost consciousness and more competitive conditions for original equipment early in the capital-expenditure cycle.

ESCO delivered stronger financial results, with orders rising 10%, revenue increasing 11% to £369 million and operating profit growing 17% to £79 million on a constant-currency basis. Its operating margin improved 120 basis points to 21.5%.

The division benefited from demand for mining buckets in North America and Australia, improving aftermarket demand, the return of dredging orders in the Middle East, and contributions from Micromine, Fast2Mine and ESEL. Mining markets represented 81% of ESCO orders.

Technology, software and growth markets

Weir highlighted several product launches during the period, including the WARMAN MCR² mill-circuit pump, which it said provides a 20% increase in operational efficiency compared with its existing offering. The product has been validated at three trial sites and is protected by eight patents, according to management.

The company also introduced Vertasys, a construction ground-engaging tool solution that management said reduced installation time and demonstrated a 15% improvement in wear life in field trials. Its new Optimil vertical stirred mill has received orders for 10 units, Weir said. When used alongside the company’s ENDURON high-pressure grinding roll technology, management said the solution can produce energy savings of up to 40% relative to traditional technologies.

Micromine, acquired in 2025, remains on track to deliver annual recurring revenue growth of more than 25% in 2026. Weir said qualified sales opportunities generated through its Minerals and ESCO networks rose 300% over the past six months, with most originating outside Micromine’s Australian home market.

The company also completed the acquisition of the remaining 50% stake in its Chile-based ESEL joint venture in March. Management said direct sales in Chile could provide a significant market-share opportunity for ESCO, where its presence is currently below that in markets including Peru and North America.

Management identified the Americas as its strongest medium-term growth region, citing increased mining-project activity and more supportive permitting conditions. It is pursuing more than 2,000 projects globally, with copper and gold projects in North and South America standing out.

Cash flow, outlook and leadership transition

Free operating cash conversion fell to 41% in the first half, reflecting working-capital outflows, increased inventories to support order-book delivery and production transfers, and the timing of share purchases for long-term incentive awards. Free cash flow was £1 million, while net debt to EBITDA reached 2.2 times.

Puffer said working capital should normalize in the second half, including debtor payments that slipped from late June into early July. The company continues to target full-year cash conversion of 90% to 100% and expects leverage to move toward the high end of its stated 0.5-to-1.5-times range by year-end.

Weir proposed an interim dividend of £0.20 per share, up 2% from a year earlier.

Andrew Neilson, CEO designate and president of the Minerals division, will assume the chief executive role next week. Neilson said his focus will be on executing against Weir’s growth opportunity in critical minerals, delivering returns from recent investments, improving operational efficiency and deploying capital for future growth.

Outgoing CEO John said the company’s strategy remains focused on sustaining operating margins above 20% while accelerating growth through mining technology, hardware, software and bolt-on acquisitions. He said Weir’s priority in 2026 is integrating recent acquisitions and reducing leverage, while continuing to build its acquisition pipeline for future opportunities.

About The Weir Group (LON:WEIR)

The Weir Group PLC produces and sells highly engineered original equipment worldwide. It operates in two segments, Minerals and ESCO. The Minerals segment offers engineering, manufacturing, and service processing technology for the use in abrasive high-wear mining applications; and differentiated technology for the use in infrastructure and general industrial markets. The ESCO segment provides ground engaging tools for large mining machines. This segment also offers cloud-based Artificial Intelligence solutions to the mining industry; manufactures and distributes highly engineered wear parts; and offers aftermarket services to the mining industry.

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