Weir (WEIR) H1 2024 earnings summary

Executive summary

• Delivered resilient H1 2024 performance amid macroeconomic and geopolitical uncertainty, with 8% operating profit growth to £215m and margin expansion to 17.8%, supported by strong aftermarket demand and Performance Excellence initiatives.

• Aftermarket-focused business model and strong AM orders offset a 3% revenue decline to £1.2bn, with group book-to-bill at 1.04.

• Free operating cash conversion improved to 68%, up 17 percentage points year-on-year, with operating cash flow up 14% to £198m.

• Interim dividend increased 1% to 17.9p per share.

• Strategic progress includes a refreshed brand, technology leadership, and continued rollout of Performance Excellence programme.

Financial highlights

• Revenue decreased by 3% year-on-year to £1.2bn, mainly due to phasing of original equipment deliveries and normalization in oil sands.

• Adjusted operating profit rose 8% to £215m; margin expanded 180bps to 17.8%.

• Profit before tax and adjusting items was £193m, up 3% year-on-year despite a £13m FX headwind.

• Free operating cash conversion increased to 68%, up from 51% in H1 2023.

• EPS stable at 53.6p before adjusting items.

Outlook and guidance

• Full-year guidance for operating profit and cash generation reiterated; revenue expected at the lower end of analyst expectations.

• Operating margin for the full year expected around 18%, ahead of prior guidance.

• Free operating cash conversion guidance maintained at 90%-100%.

• Growth in greenfield project approvals, especially in Africa and Asia, expected to underpin future revenue.

• Ambition to expand operating margins to 20% by 2026, supported by Performance Excellence programme.