Weir Group has reported growth across orders, revenue and margins in a trading update for the first quarter.
The Glasgow-headquartered engineering business revealed strong demand for mining equipment, while brownfield activity and sustainability projects drove order growth up by 22%.
Minerals after market orders were up 5% on the back of positive mining production trends and installed base growth.
However, total orders from its ESCO business fell by 6%, reflecting overall trends in infrastructure markets.
Total first quarter revenues and operating margins were up year-on-year, with 2023 guidance reiterated.
Weir stated that it is on track to deliver on a target of 17% operating margin this year.
The first quarter analysis suggested that commodity prices are well above miners’ cost to produce, with ongoing tightness in physical inventories and strong end market demand incentivising customers to maximise ore production.
"These factors, together with the ongoing effect of declining grades and more complex ore bodies, drove demand for our mining spares and expendables," read the statement. "Demand was strong across most hard rock mining territories, and in particular in Asia Pacific and South America, where recent market share gains and installed based growth drove incremental demand."
Customers are ordering Weir solutions to de-bottleneck, expand and improve the sustainability of existing mines, while also increasingly engaging on new sustainability-driven technologies, such as redefined mill circuit and the Motion Metrics digital offering.
Group orders in the quarter were up 4%, with original equipment orders rising 22%.
As expected, net debt increased in the quarter, reflecting typical seasonal patterns.
To ensure future margin expansion and cash conversion, Weir began consolidation of North American facilities in the minerals division, in order to improve customer proximity, alongside projects to implement lean enterprise principles across global value streams.
Phasing of operating profit is expected to follow typical seasonal patterns and operating margins are expected to expand sequentially through the year.
The board stated that the long-term fundamentals for Weir's mining business are "highly attractive", underpinned by decarbonisation, GDP growth and the transition to sustainable options.
Chief executive Jon Stanton commented: “The mining industry needs to produce more critical metals to support the transition to net zero, and must extract these in a more sustainable way.
“Our leading global brands, engineering capability and technology-led strategy means we are well placed to capitalise.
“Our strong execution and order book growth in the first quarter reinforces our confidence in achieving our 2023 guidance.”
Don't miss the latest headlines with our twice-daily newsletter - sign up here for free.
