Conflict costs

Weir Group to take £20m hit on Russia suspension

Jon Stanton
Jon Stanton: welfare of our people is paramount

Weir Group, the Glasgow-headquartered mining technology business, said it expects to take a £20 million hit from winding down its operations in Russia.

The group’s business in Russia comprises a sales and service organisation employing 267 people, the majority of whom work in the minerals division.

In a trading update following the company’s full suspension of business and operations in Russia in March chief executive Jon Stanton said the company strongly condemned the military invasion of Ukraine.

“Our priority remains the welfare of our Ukraine-based colleagues and their families and we are keeping in close contact, supporting them in whatever ways we can.

“More widely, we are deeply saddened by the humanitarian crisis that continues to unfold and have pledged financial support to organisations working at the front line to help the people of Ukraine.

“Our thoughts are with all those whose lives are being affected by these events and join with others in hoping for a swift and peaceful end to the hostilities.

“The loss of sales in 2022 is expected to have an impact on group underlying operating profit of up to £20m in the year. The group’s assets in Russia comprise primarily of inventory and receivables and represent c.2% of the Group’s net assets.

“While a review of the recoverability remains ongoing, this could result in an exceptional write-off during 2022.”

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Group orders in the first quarter were up 15%, driven by significant growth in demand for spares with aftermarket orders up 28% year-on-year. Original equipment orders were 17% lower than in the same period last year where we booked a £34m order from Ferrexpo. Adjusting for that, growth in original equipment orders was 8% in Q1 2022.

Jon Stanton, chief executive, commented: “The group has had an excellent start to the year, generating record orders and executing strongly in a complex global environment.

“Conditions in mining markets are highly favourable as high commodity prices ensure miners remain incentivised to maximise ore production, which is driving demand for recurring aftermarket and debottlenecking solutions.

“We continue to successfully manage the disruption in global supply chains from Covid-19 and the impact of inflation.

“Looking ahead to the full year, we remain confident in the outlook and expect to deliver strong growth in constant currency revenue and profit in 2022 and anticipate progress towards our medium-term margin and cash targets.”

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