Weir revenue steady at £2bn but dividend on hold

Glasgow-based global engineering and mining giant Weir Group on Tuesday announced its results for the year ending December 31, 2020, showing revenue stable at almost £2 billion — but the firm said a resumption of its dividend will depend on a “combination of factors.” 

Weir completed the sale of its oil and gas division to Caterpillar last month as it becomes “a provider of premium technology to global mining and infrastructure markets.”

Revenue from continuing operations slipped 4% to £1.96 billion in 2020 and adjusted profit before tax from continuing operations was 5% lower at £255 million.

On its dividend, Weir said: “In response to the Covid-19 pandemic, on 25 March 2020, the board took the decision to withdraw the proposal to pay the final 2019 dividend as part of wider cash preservation actions taken by the group.

“The board did not propose an interim or final dividend for 2020.”

Weir added: “Future dividend payments will be aligned to the group’s new capital allocation policy … and includes a target to pay out 33% of adjusted EPS through the cycle.

“Resumption of the dividend will depend on a combination of factors including market outlook and leverage.”

The Glasgow firm said 80% of its revenues now come from “attractive” mining markets.

Weir shares fell about 3% after the results were announced — but the shares have soared about 50% over the past 12 months amid analysts’ enthusiasm for its overall strategy of targeting mining markets.

Weir Group CEO Jon Stanton said: “The group delivered a highly resilient performance in what was an extraordinary year. 

“This is a reflection of the fundamental strength of the business and its culture, together with the magnificent achievements of the people within the Weir global family. 

“As we enter the group’s 150th year, Weir has been transformed into a premium mining technology provider that will help its customers become more sustainable and efficient and deliver the essential resources demanded by demographic trends and the fight against climate change.

“The group is now positioned to benefit from these powerful long-term structural growth themes for many years to come. 

We’ve had a good start to 2021 and we expect to deliver growth in full year constant currency profits subject to any further disruption from the ongoing Covid-19 pandemic. 

“More broadly, underlying conditions are favourable and with the strong platform we’ve created we’re confident of outperforming our markets over the next three years and delivering sustainable long-term profitable growth.”