Weir reports resilient results, agrees to acquire Micromine

(Sharecast News) - Weir Group reported a resilient 2024 in its final results on Friday, with strong aftermarket demand and improving margins, as it announced the strategic acquisition of mining software provider Micromine. The FTSE 100 company said that for the year ended 31 December, it recorded a 2% increase in orders on a constant currency basis, reaching £2.52bn, while revenue declined 5% to £2.51bn.

Adjusted operating profit rose 3% to £472m, with margins expanding 140 basis points to 18.8%.

Statutory profit before tax increased 8% to £347m, and free operating cash conversion stood at 102%, exceeding guidance.

The company also raised its dividend by 4% to 40p per share.

It said the second half saw an acceleration in aftermarket activity, with fourth-quarter AM orders up 10% year-on-year.

Brownfield demand remained strong, though original equipment orders were slightly lower due to project award delays.

Weir said its performance excellence programme contributed £29m in savings, prompting an upgrade of the 2026 target to £80m, with expectations of operating margins surpassing 20%.

Looking ahead to 2025, Weir said it anticipated growth in revenue, operating profit, and margins on a constant currency basis, supported by strong order intake and expected cost savings of £20m.

Free operating cash conversion was projected to remain within the 90% to 100% range.

"Weir is delivering on its mission to provide mining technology for a sustainable future and executing well against the commitments set out in our equity case," said chief executive officer Jon Stanton.

"We are shaping innovation that will enable the mining industry to scale up and clean up and deliver strong outcomes for customers. At the same time our performance excellence programme has created an efficient scalable platform that positions Weir for compounding growth in the years ahead."

Going into 2025, Stanton said Weir had a "growing pipeline" of project bids, a strong order book, and was seeing positive aftermarket demand drivers in mining.

"For the full year, we expect to deliver growth in revenue, operating profit and margins.

"We expect our performance excellence programme will deliver incremental savings of £20m in 2025, and cumulative savings of £80m through 2026, moving our operating margins sustainably beyond 20%."

In a separate announcement, Weir said it had agreed to acquire mining software provider Micromine for £657m.

The deal was expected to close in the second quarter, and would be funded through a combination of cash and new debt.

It said Micromine, which generates about 90% of its revenue from recurring software-as-a-service (SaaS) subscriptions, achieved a compound annual revenue growth rate of about 25%.

The acquisition was expected to be immediately accretive to Weir's earnings and margins, with return on invested capital exceeding the company's weighted average cost of capital by 2028.

Weir planned to leverage its global distribution network to accelerate Micromine's growth while integrating its digital capabilities to optimise mining operations.

Following the acquisition, Weir said its net debt-to-EBITDA ratio was projected to remain below 2.0x by the end of 2025 and below 1.5x by 2026.

"The acquisition of Micromine is a significant step in our strategy of investing in technology to accelerate smart, efficient and sustainable mining," Jon Stanton added.

"The combined force of Micromine and Weir will create a sector-leading globally scaled platform to optimise performance across the mining process.

"Combining Weir's engineering technology expertise and customer networks with Micromine's leading software solutions and diversified customer base will allow us to further harness digital technology to drive productivity and sustainability for the global mining industry."

At 0826 GMT, shares in the Weir Group were up 1.44% at 2,319p.

Reporting by Josh White for Sharecast.com.