Glasgow-based global engineering and mining giant Weir Group said on Thursday it has resumed paying a dividend as its profit before tax rose 31% to £102 million for the six months to June 30, 2021.
Orders for Weir, which employs more than 11,000 people around the world, rose 17% to £1.09 billion in the first half of the year.
“With high levels of confidence in our strategy and future prospects, combined with our strengthened balance sheet, the board has decided to resume dividend payments and has today announced an interim dividend of 11.5 pence per share, which is 33% of adjusted EPS for the period, in line with our capital allocation policy of returning a third of EPS through the cycle,” said Weir.
First-half revenue slipped about 1% to £900 million, while adjusted profit before tax rose 6% to £121 million.
Weir Group CEO Jon Stanton wrote: “The first six months of 2021 saw the global economy continue to recover supporting near-record commodity prices, particularly for our main exposures of copper, iron ore and gold.
“Commodity pricing was also underpinned by stimulus spending in China and the positive longer-term outlook for mining markets.
“As a result, customers focused on maximising ore production with volumes and machine utilisation continuing to normalise, as expected for the later-cycle parts of the mining value stream.
“Mining market growth was strongest in Australia, North America, Central Asia, Russia and Africa.
“South America, which saw good growth in the prior year, was broadly stable.
“Infrastructure markets continued their strong recovery with sand and aggregates markets benefiting from residential housing activity, particularly in North America.
“The continuing improvement in end market conditions was seen alongside global logistical challenges.
“In regions where vaccination programmes are less advanced there continued to be workforce constraints on miners and reduced access to third-party suppliers.
“Covid-related disruptions also included government-mandated restrictions that reduced capacity in the period at Weir facilities in India and Peru, with Malaysia and Australia subsequently affected by shutdowns in July.
“In addition, our operations dealt with several adverse weather events, political instability in South Africa and Peru, and significant supply chain disruption that increased materials and freight costs and lead times from the group’s suppliers.
“Despite this we were always able to fully meet customer demand thanks to the strength of our integrated regional operating model and the tremendous efforts of our teams to mitigate headwinds.”
Stanton added: “The order momentum we are seeing reflects demand for recurring aftermarket consumables returning to pre-Covid levels and growing adoption of our more sustainable mining technologies that increase customer efficiency while reducing energy, water and waste.
“Looking to the full year, we continue to expect to deliver growth in constant currency profits and margins in line with our, and current market expectations.
“We are also making good progress on our new three-year performance goals that will see us increase revenues, expand margins, and significantly reduce our environmental footprint.
“Structural demand for clean energy metals is creating a multi-decade growth opportunity for our business as the mining industry invests in expanding capacity while reducing its environmental impact.
“Our project pipeline continues to grow, particularly for more sustainable solutions, and we are pleased to be resuming the dividend, reflecting our confidence in our strategy and future prospects.”