Join our community of smart investors

Weir Group orders leap in metals rush

Record iron ore and copper prices and sustainability push sees Weir re-introduce interim dividend
Weir Group orders leap in metals rush
  • Orders up 17 per cent year-on-year overall and 57 per cent in OE division
  • Interim dividend of 11.5p announced 
IC TIP: Buy at 1,741p

Record metals prices saw miners trying to get every tonne possible out of the ground this year, Weir Group (WEIR) said in its interim results. This boosted the mining technology company’s original equipment (OE) division’s order book by 57 per cent on last year, while its aftermarket (AM) division had a steady order level. 

The 12 per cent increase in adjusted operating profit, on a constant currency basis, to £143m, was enough for Weir to bring back its interim dividend. Earlier in the year, with the mining bull market already apparent, the company updated its pay-out policy to a third of adjusted earnings to be given to shareholders, and this is reflected in the 11.5p interim dividend. 

Chief executive Jon Stanton said demand for “more sustainable solutions” had boosted the company’s project pipeline as well as the high prices. The supply chain disruption caused by Covid-19 drove a split between revenue and orders, Stanton said, although he expects “a stronger second half in terms of revenue delivery”. 

This year’s interim numbers are the first without the oil and gas division, the sale of which to Caterpillar (US:CAT) was completed in February. The company said its full-year performance would be in line with market expectations. Consensus estimates compiled by FactSet put full-year adjusted earnings per share at 79p, 7 per cent ahead of 2020. 

Weir’s numbers are nowhere near the huge profits and splashy dividends of the miners themselves but it offers stable exposure to a strong industry. Buy. 

Last IC View: Buy, 1,932p, 02 Mar 2021

WEIR GROUP (WEIR)   
ORD PRICE:1,741pMARKET VALUE:£ 4.5bn
TOUCH:1,741-1,743p12-MONTH HIGH:2,130pLOW: 1,168p
DIVIDEND YIELD:0.7%PE RATIO:30
NET ASSET VALUE:534p*NET DEBT:49%
Half-year to 30 JunTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
202091078.023.7nil
202190010229.411.5
% change-1+31+24-
Ex-div:07 Oct   
Payment:05 Nov   
*Includes intangible assets of £1.2bn, or 475p per share