- Record order book
- 38% increase in the dividend
- CEO flags ‘compelling’ opportunity
A strong set of results, encouraging outlook and a near-40% increase in the dividend helped put a smile on the face of Weir (WEIR) shareholders on Wednesday morning.
Shares in the mining services firm were up 6.3% to £20.19, extending year-to-date gains to more than 20%, as it posted 2022 revenue of £2.47 billion, up 28% year-on-year and comfortably above the consensus forecast of £2.36 billion.
This fed through to pre-tax profit up 40% at £260.5 million and underpinned an eye-catching 38% dividend hike to 32.8p per share, with the final payout raised by 57%.
The adjusted operating margin of 16% was up seven percentage points on 2021, and the company remains on target to hit its margin target of 17% for 2023. Year-on-year order growth was 14% and the company is sitting on a record order book.
‘COMPELLING VALUE CREATION OPPORTUNITY’
Chief executive officer Jon Stanton said: ‘The value creation opportunity for Weir is compelling. The mining industry is playing a crucial role in meeting the twin demands for decarbonisation and economic growth, resulting in multi-decade demand growth for critical metals.’
Shore Capital analyst Akhil Patel commented: ‘Population growth, the convergence of living standards, urbanisation, ore grade decline (i.e. more materials need to be processed to extract the same amount of metals/minerals) and the demand for metals/battery metals to support the global clean energy transition/decarbonisation all point in Weir’s favour.
‘Especially given the need for mining to become more efficient and reduce its carbon emissions.’
Weir sold off its oil and gas operations in 2021 and Patel is positive on the impact this has had on the business.
‘Becoming a pure-play mining-focused business reduces volatility, increases resilience, and enhances its earning quality via its aftermarket earnings profile (i.e. less cyclicality) and margin expansion.’
