Weir Group PLC (WEGRY) Full Year 2025 Earnings Call Highlights: Strong Revenue Growth and ...

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Revenue: Increased by 6% to GBP2.6 billion.

Operating Profit: Increased by 15% to GBP518 million.

Operating Margins: Expanded by 150 basis points to 20.2%.

Orders: Increased by 7% to GBP2.6 billion.

Original Equipment Revenue: Increased by 2%.

Profit Before Tax: GBP447 million, GBP19 million ahead of last year.

Earnings Per Share (EPS): Increased by 3% to 123.8p per share.

Free Operating Cash Conversion: 92%, within the target range of 90% to 100%.

Return on Capital Employed: Decreased by 140 basis points to 17.9%.

Full Year Dividend: 41.7p per share, a 4% increase from last year.

Minerals Division Operating Profit: Increased by 11% to GBP406 million.

ESCO Division Operating Profit: Increased by 22% to GBP152 million.

Micromine Recurring Revenue: Grew to 88% with annual recurring revenue growth of 24%.

Performance Excellence Savings: Cumulative savings of GBP59 million, with a final target of GBP90 million.

Scope 1 and 2 Emissions: Reduced by 31% against the 2019 baseline.

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For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Weir Group PLC (WEGRY) delivered a strong financial performance in 2025, with a 6% constant currency revenue growth year on year.

Operating margins expanded by 150 basis points, achieving a 20.2% margin a year earlier than expected.

The company reduced its absolute Scope 1 and 2 emissions by 31% against the 2019 baseline, surpassing its original 2030 target.

Weir Group PLC (WEGRY) made significant strategic progress with self-funded acquisitions and partnerships in digital, geographic expansion, and product extensions.

The company maintained a strong free operating cash conversion rate of 92%, within its target range of 90% to 100%.

Net debt-to-EBITDA increased to 1.9x, towards the top end of the target range, following significant acquisition activity.

Return on capital employed decreased by 140 basis points to 17.9%, though still above the cost of capital.

The total incident rate increased over the prior year, indicating a shortfall in safety performance.

Working capital as a percentage of sales increased by 170 basis points to 22.4%, above the target of 20%.

The company faced a GBP22 million translational FX headwind, impacting profit before tax.

Q: Can you explore the growth outlook for FY26, particularly regarding mid-single-digit organic growth? What drives this growth, and could larger orders come through in the second half of the year? A: Jonathan Stanton, CEO: We see a positive demand environment across the mining and metals complex, driving ongoing demand for aftermarket and smaller OE projects. While the potential for further CapEx growth looks positive, predicting exact timing is challenging. We expect a consistent level of smaller OE projects and a positive setup for larger projects, possibly in the latter part of the year.

Q: Regarding Reko Diq, did all scheduled orders get shipped, and how do we think about aftermarket revenue there? A: Jonathan Stanton, CEO: We've delivered and been paid for the HPGRs, with a modest amount left in the order book. We have no balance sheet exposure. While the mine's development is under review, we remain hopeful for the aftermarket opportunity, given the Pakistani government's investment in the project.

Q: On Micromine, recurring revenue growth was 24% in FY25. How should we think about this growth going forward, particularly in 2026? A: Jonathan Stanton, CEO: The recurring revenue growth aligns with historical performance. In 2025, we set up to exceed this growth by leveraging our global footprint. We aim to deliver higher revenue growth over the next three years, with an acceleration expected in 2026.

Q: Can you quantify the moving parts in the 50 basis points margin expansion guidance, and how should we think about R&D and IT investment costs? A: Brian Puffer, CFO: The margin expansion includes a 110 basis point increase from Performance Excellence and a 20 basis point increase from acquisitions, offset by an 80 basis point decrease due to R&D and IT investments. These investments are crucial for future growth, and while they present a short-term headwind, they are expected to deliver long-term benefits.

Q: On aftermarket orders, growth was lower in Q4. Can you remind us of the underlying aftermarket performance and expectations for acceleration? A: Jonathan Stanton, CEO: Despite a tough comp due to a multi-period order, Q4 aftermarket orders were strong. Adjusting for this, minerals would have shown 2-3 percentage points higher growth. We expect mid-single-digit growth in aftermarket orders for 2026, with potential upside given strong market fundamentals.

Q: Regarding free operating cash flow guidance of 90% to 100%, are there any upside risks, and how are raw material prices affecting pricing? A: Brian Puffer, CFO: We expect working capital to normalize, supporting our cash conversion target. While raw material prices present a potential headwind, we have consistently managed costs and pricing to protect gross margins, and we remain confident in our ability to adjust pricing as needed.

Q: Can you discuss the M&A pipeline and intentions for the next 12-18 months, particularly in software and AI? A: Jonathan Stanton, CEO: While 2026 will focus on deleveraging, we continue to see opportunities in both software and hardware. Smaller bolt-ons in software are likely, enhancing our Micromine platform. AI plays a significant role in mining efficiency, and we see minimal threat from AI to our software's mission-critical applications.

Q: Could you provide color on the pipeline for mineral exposures driving growth in the next 2-3 years, particularly copper and gold? A: Jonathan Stanton, CEO: Gold is strong due to geopolitical factors, with increased production efforts. Copper faces a supply deficit, with expansion being a major theme. Iron ore prices remain robust, especially for higher grades. Overall, the pipeline is diversified, supporting our growth across various minerals.