By Scott Wright

THE chief executive of Glasgow-based Weir Group has declared the long-term prospects for the engineer’s mining solutions technology are in a good health as the company reported a hefty rise in first-half profits, sparked by resurgent orders as the global economic recovery stepped up.

Jon Stanton pinpointed to the “multi-decade growth opportunity” open to Weir amid long-term demand for metals such as copper, nickel and lithium, which he said will play a key role in the decarbonisation of the world economy.

Mr Stanton was speaking as Weir reported a 31 per cent rise in pre-tax profits to £102 million for the six months ended June 30, driven by a 57% rise in original equipment orders. Aftermarket orders were up by 6%.

Weir said it saw the strongest mining growth in Australia, North America, Central, Asia and Russia, and underlined the recovery of sand and aggregates markets on the back of residential housing activity, notably in North America.

The company reinstated dividends for shareholders to reflect its improving outlook and strengthened balance sheet, having temporarily suspended payouts following the outbreak of the pandemic last year.

Mr Stanton told The Herald that Weir’s main mining and infrastructure markets have recovered strongly.

“That is coming through in the fantastic orders we have seen in the first half of the year, and we are really expecting that momentum to continue now,” he said.

“It’s a story of really, really strong markets and good orders coming through.”

While Mr Stanton acknowledged that the pandemic had not gone away – Weir said yesterday that capacity had been constrained at its facilities in India and Peru because of restrictions in the first half – he backed the company to continue mitigating the challenges.

He said demand from customers is strong and predicted that it will continue to grow, highlighting the need for copper, nickel and lithium as the economy becomes increasingly electrified.

Mr Stanton said: “I really believe we are going to see many years of expansion of supply, plus customers also needing to meet their emissions targets, [and] reduce their energy and water consumption. “[That] also means adoption of new technologies, which is also very positive for us as well.”

Asked if the increasing focus on climate change was adding urgency to Weir’s research and development, Mr Stanton said: “Absolutely. We have tried to put sustainability right at the heart of our strategy.

“If our customers are to reduce their emissions and ultimately get to net zero by 2050 – and they are under a lot of pressure to do so – then they are going to have to have a technology transformation to do that.

“Our pipeline of innovations is very much focused on that and bringing to market equipment and new solutions that have a much lower C02 footprint.”

The results were the first to be reported by Weir as a “pure-play” mining business following the sale of its oil and gas business last year – a move which the company said had given it “absolute focus”.

The sale of the loss-making division to Caterpillar Group of the US was completed during the first half.

Mr Stanton said: “Oil and gas was a business which we as a management team enjoyed, but was very complex and volatile, and we don’t have that anymore.

“It allows us to have absolute focus and no distractions, and the ability to deploy our capital and resources solely in areas where we think there is huge potential ahead.”

Meanwhile, the company declared its intention to pay an interim dividend of 11.5p per share.

Asked to comment on the importance of the move, Mr Stanton said that “now is the right moment” to resume payouts, noting that the company’s “balance sheet is in a much, much better place now” following the sale of the oil and gas business. He added: “We were in a position financially where it was absolutely right to reinstate the dividend.

“But equally it is a sign from the board about how positive we are about the strategy and the future prospects of the business. It is an important moment.

“I’m not sure it is the most important thing for our investors, because I think they buy into the growth story that is ahead ... but it is important we have the dividend as a discipline and that we are returning some cash to our investors each year.”

Weir kept its outlook for the full year unchanged. Shares closed down nearly 6% at 1,791.61p.