Weir Group ((WEGRY)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call from Weir Group painted a positive picture, showcasing strong revenue growth and successful strategic initiatives. Despite facing challenges such as FX translation headwinds and a high tax rate, the company reported robust performance across key divisions, signaling a promising outlook for the future.
Revenue Growth and Margin Expansion
Weir Group reported a 4% revenue growth on a constant currency basis in the first half of 2025. The company also achieved significant margin expansion, with operating margins increasing by 220 basis points to 19.8%. This growth has led to an upgraded full-year guidance, anticipating operating profit margins around 20%.
Strong Performance in Minerals Division
The Minerals division was a standout performer, securing a GBP 40 million order for a sustainable tailings solution in Chile. The division’s operating profit increased by 18% to GBP 188 million, with margins improving by 250 basis points to 21.8%, highlighting the division’s robust performance.
Successful Acquisitions and Strategic Investments
Weir Group completed the acquisitions of Micromine and announced strategic investments in CiDRA and Townley. These acquisitions are expected to be EPS accretive in the first full year of ownership, underscoring the company’s strategic focus on growth and innovation.
Positive Order Growth
The company experienced positive order growth, with total orders in the first half reaching GBP 1.3 billion, an 8% increase. Original equipment orders grew by 7%, while aftermarket orders rose by 8%, indicating strong demand across the board.
FX Translation Headwinds
Despite an FX translation headwind of GBP 12 million, Weir Group’s profit before tax was GBP 213 million, GBP 20 million ahead of last year. This resilience demonstrates the company’s ability to navigate currency challenges effectively.
High Tax Rate
Weir Group faced a high effective tax rate of 28.6%, primarily due to withholding tax on dividends and a significant portion of profits being generated in high-tax jurisdictions like Australia. This remains a challenge for the company moving forward.
Forward-Looking Guidance
Looking ahead, Weir Group provided a detailed guidance for the remainder of 2025, emphasizing continued growth and strong financial performance. The company expects to achieve a cumulative savings target of GBP 80 million by 2026 through its Performance Excellence program. With a high free operating cash conversion target of 90% to 100% by year-end, Weir is well-positioned for future growth, supported by strategic acquisitions and investments.
In summary, Weir Group’s earnings call reflected a positive sentiment, driven by strong revenue growth, successful acquisitions, and robust performance in key divisions. Despite challenges such as FX headwinds and a high tax rate, the company’s strategic initiatives and forward-looking guidance indicate a promising future for stakeholders.