The Weir Group PLC

Good morning everyone, and many thanks for joining the call today to discuss our results for the first half of 2026. Before we start, I'd like to draw your attention to the usual cautionary notice on forward-looking statements. We have a lot to share today, but before we dive into our results for the half, I'd like to hand you over to Andrew Neilson, who will be taking over the reins as CEO next week, to say a few words. After we hear from Andrew, I'll start with some of the key highlights of the first half performance, and the progress that we've made against our key strategic priorities. Brian Puffer, our CFO, will then run through the numbers in more detail and finish an outlook, after which I'll give you some closing remarks before taking your questions. So with that, I'll hand over to Andrew.

Good morning, everyone. I'm very excited to be picking up the baton from John and leading a business of Weir's quality, heritage and potential. I've been with Weir for 16 years and I've worked across all areas of the business from strategy and M&A to integrating and leading ESCO and most recently heading up our minerals division. That experience has given me a deep understanding of our markets, our customers, our operating model and the rich capabilities that differentiate Weir from our peers. It has been a privilege to work so closely with Jon over the last decade. helping transform Weir into a focused mining technology leader. Today, our strength is underpinned by a stronger, more resilient portfolio that now comprises both hardware and software solutions. That is opening up more and more opportunities to help customers all around the world respond to the rising demand for critical minerals, sustainable practices and responsible capex. As Chief Executive, my focus will be in seizing this multi-decade opportunity. My priority will be to build on what we have started, driving our performance with strong execution and delivering on the recent investments that we have made, whilst continuing to unlock operational efficiencies and deploy capital to accelerate our future growth. Weir is a proud engineering heritage, but what excites me most is the future. We have the customer relationships, technology platforms, operating discipline and deep capability to help shape the next generation of mining. If we execute well, we can support customers in producing the resources the world needs while delivering sustainable compounding value for shareholders. So it's a big opportunity ahead and it's one I'm very excited to lead. I look forward to meeting you in the months ahead But for now, let me hand you back to John and Brian to take you through the results.

Thank you, Andrew. You're certainly taking on the CEO role at a very exciting time for Weir. I look forward to seeing the business continue to flourish under your leadership. I'm going to start today's presentation with a summary of our performance and strategic progress before we go into a deeper dive specifically on our growth drivers and competitive positioning. In short, our financial performance for the first half reflects a real acceleration in Q2 orders amid strong market activity levels, putting us exactly where we need to be to deliver on our full-year guidance. Brian will take you through the details shortly, but let me provide the headlines which sets the context for the remainder of my presentation. First to orders, where we've grown 8% year-on-year on a constant currency basis, and that's against a very tough 2025 comp which included the £40 million to Labras order and a heavy first half weighting to aftermarket orders last year. Original equipment orders grew by 10% year on year, supported by a high bid conversion rate on projects, over 90% success rate in pump trials consistent with our historic average and excellent progress with new product penetration, particularly in comminution. Aftermarket orders grew by 8% with strong activity in our largest minerals exposures of copper, gold, iron ore and oil sands. And we saw the expected bounce back from the weather related disruptions of the first quarter. The key point to highlight is the Q2 aftermarket organic orders of minerals up 8% year on year, back in line with our expected mid to high single digit range. and Esco saw similar organic growth in Q2 and together that puts us on track to meet our full year growth expectations after the slow start in Q1. Revenue increased by 5% on a constant currency basis as contributions from acquisitions were partially offset by the effect of some deliveries being deferred into the second half following our last round of production transfers within Performance Excellence. Just to give you a little colour on that, you'll recall that late in 2025, we commenced relocating rubber parts to production to Malaysia and India, as well as castings to the Americas and Africa, following capacity reductions in Australia and the UK. Now as you see on the map, these relocations involve transfers between multiple individual sites within our global operations, with several complex movements across continents. As we progress with the transfers, unusual demand patterns seen in Q1 and early Q2 created a shift in product mix relative to our planning assumptions, which pushed out production and deferred deliveries. But with production re-planned and a return to usual demand patterns, we exited June with strong operating momentum, which will allow delivery of delayed orders over the second half. With a book-to-bill of 1.12, we've grown our order book in the first half by circa £150m, and with continuing strong market activity levels entered the second half with strong top line momentum underpinning our full year guidance. Dunnings of profit where on a constant currency basis adjusted operating profit was stable and resulting operating margins were 18.8% against a very strong comparison with mixed effect and the delivery deferrals I just mentioned more than offsetting first half performance excellence benefits. However, with the first half headwinds largely reversing over the remainder of the year and good line of sight on delivery of the remaining savings within performance excellence, we continue to expect operating margins above 20% for the full year. And finally, free operating cash conversion of 41% reflects an increase in working capital, supporting second half order book delivery and production transfers, as well as the on-market purchase of shares for our LTIP awards during the first half. Again, these effects will unwind or normalize over the balance of the year, and we expect to deliver a cash conversion of between 90% and 100% in line with our established track record. Now, just a few comments on current market conditions. In terms of mining capex, we're seeing accelerating growth and activity in our project pipeline, particularly in North and South America, where permitting is becoming more supportive of new mining activity. We've seen early packages awarded in North America, and more are coming in South America over the next 12 to 24 months. The industry grapples with the delivery of new mines, the challenges of capsule efficiency, mine productivity and social license to operate are acute. So it's really pleasing to see the increasing customer focus on innovative hardware and software technologies as projects move through feasibility into the planning stage. Meanwhile, the focus on improving the efficiency, productivity and sustainability of existing resources continues unabated. Looking at OPEX, as I said earlier, we've seen a normalisation of demand patterns since Q1 and see healthy underlying production growth in our big four exposures of copper, gold, iron ore and oil sands. One other bright spot is the planned start-up of mothballed hard rock mines, particularly lithium in Australia. Geopolitical activity has affected some of our smaller markets, but overall we expect the current positive conditions to continue. supporting continued growth in orders over the course of the second half. Now turning to strategic progress so far this year, the foundation for everything is the safety and wellness of our people. And while our total incident rate is stable so far this year, we're gaining traction with the improvement priorities I recently set out, which is reflected in fewer first aid cases and lower severity rates across the business. Beyond physical safety, we've again been recognised by CCLA in Tier 1 of their Employee Mental Health and Wellbeing Benchmark, placing sixth among the largest companies in the UK. We're making great progress on technology to expand our addressable markets with new solutions, but also to protect and extend our competitive advantage in core products. New solutions brought to market include the OptiMill Vertical Stirred Mill, or VSM, and in core products we launched our next generation mill circuit pumps and construction GET, both of which will deliver step changes in efficiency for our customers, which I'll talk about in more detail later. On sustainability, we released our updated climate transition plan earlier this year and our leadership continues to be recognised with CDP awarding Weir an A score for climate transparency for the fourth consecutive year. Our progress with acquisitions continues at pace. Deals completed in 2025 continue to perform in line with expectations, with Micromine on track to deliver growth in annual recurring revenue of more than 25% this year, supported by our global cross-selling initiatives, which I'll also insert a little later. In March, we completed the acquisition of the remaining 50% share of our Chile-based joint venture, ESL, unlocking the opportunity to grow market share by direct sales in the world's largest copper-producing region. Longer term, and as we set out of our capital markets about last December, our focus is on delivery of the growth potential that's been unlocked by the transformation of Weir over the past few years. And we're making good progress. Our new products are driving the core business toward higher market shares and creating new market leadership positions as we expand our flowsheet solutions. We're positioned strongly with new foundry capacity in the fast-growing North and South American markets and Micromine is at the heart of what is becoming a very exciting end-to-end digital value proposition. While the 2026 focuses on integration and delivering, we're actively building the pipeline of new acquisition opportunities to compound future growth. So, with that context set, I want to turn into a more detailed review of the growth prospects for Weir, starting with the outlook for the mining market. Now across the business we're actively pursuing more than 2,000 projects across all commodities and regions with copper and gold across the Americas being the standouts. This is going to be supportive of robust future OE order intake and will drive ongoing growth in our installed base and therefore aftermarket opportunity. Likewise, the projected production trends which further underpin aftermarket growth are positive. On a revenue weighted basis, we expect to see growth in copper, iron ore and nickel drive overall demand for aftermarket spares and expendables, with coal the only negative, but now a very small market for Weir. Declining ore grades will also be an ongoing factor as new lower grade mines come online. So our markets are growing, and within those markets our core pump and G.E.T. businesses retain their market leadership and competitive position, both of growing market share. Maynard's remains the clear number one in processing and mill circuit pumps, with more than 50% market share, well ahead of our competition, driven by our differentiated technology and customer intimacy. Our market share grew in the first half where we won over two thirds of new large pump tenders and maintained our aftermarket capture rate. Our success extended to competitive mill pump trials where we won 13 of 14 campaigns, taking our total success rate above 90% for the year, while our recent acquisition of Tony only adds to the opportunity pipeline in North America, which is currently the fastest growing mining market. Likewise, ESCO is the global leader in ground-engaging tools for mining, again with clear technology leadership and embedded customer relationships which deliver the industry-leading total cost of ownership. In the first half, ESCO won over 100 net major bigger conversions, an increase of nearly 40% year-over-year, including three with new customers in Chile as we drive our Go Direct model in that market. Our competitive success continues to demonstrate the value of our industry leading total cost of ownership, combining leading edge technology with world class service. And that's particularly true for our mill circuit pumps, with their well earned and long standing industry reputation for running harder and longer than any of our competitors. and that's the essence of how we've been successful in over 90% of competitive trials consistently gaining market share against all of our competitors. And here are the examples. Trial wins in Latin America in large copper and gold applications where we deliver the performance when competitors fall short. Landmark wins in China against local competitors when customers see the advantage of total cost of ownership. and Wins in Africa and Australia, where customers invested in step-change technology to deliver the performance they needed. Delivering technology today is important, but as with any competitive advantage, you must invest to retain leadership, and that's exactly what we're doing. And I wanted to highlight two next generation iterations of our core products. Starting with the newly released MCR squared mill circuit pump which delivers a step change in operational efficiency of 20% compared to our existing offerings, further extending the lead over our competitors. This significant increase in performance demonstrates the powerful combination of our leading material science, hydraulic engineering and digital capability and the results have been proven at three trial sites as part of product validation. The MCR² is protected by eight patents and Dayworn Next digital enablement, fitting seamlessly into our existing mill pump business model. And ESCO has developed Vertisys, a next-generation G.E.T. solution for the construction industry, after trials at six customer sites. Vertisys incorporates a unique vertical integrated locking system, which significantly reduces installation time and keeps machines out in the field. Borrowing on the material science from our Nexus suite of mining GET solutions, several field trials have validated a 15% increase in wear life compared to other offerings and generated significant excitement at the recent product launch. Beyond our core products, we continue to invest in bringing new technology into our broader solution set and recently introduced the new Optimal BSM, the latest addition to our Endura line of comminution products. The engineering team has done a fabulous job bringing a new concept for serve mills through product development and into the market in less than 12 months. We've now received orders for 10 VSMs already, across the product range, based on the expertise and credibility of our team, and there's more to come. What sets the OptiMill apart from other comminution solutions is the proprietary grinding mechanism, a media, which improve energy efficiency and increase wear life, Reducing Maintenance Frequency and Delivering a Lower Total Cost of Ownership. As with MCR2 and Vertisys, this technology includes integrated digital automation, has significant patent protection and fits perfectly into our aftermarket intensive razor blade business model. And when combined with the Enduron HPGR on the comminution flow sheet, we see energy savings of up to 40% compared to traditional technologies. So as you can see, our understanding of what customers need and delivering the right solutions are what keep them choosing Weir for their most mission-critical needs. Our innovative solutions reach across the flowsheet and lower total cost of ownership by providing greater uptime and higher utilization, reducing energy and water consumption. In a recent example in India, a major iron ore producer chose Weir for both their comminution and tailings flowsheets. Led by our optimal VSM and GIHO positive displacement pumps, these flow sheet solutions will both increase the energy efficiency of the mine and increase the tailings capacity of the operation, allowing the concentrator to process more rock. India is an exciting market for Weir, with domestic iron ore expected to grow five-fold over the next decade, and having this great case study is a strong first step in positioning Weir as a market leader in the country as future projects come to market. Finally on the strategic growth roadmap is software, where Micromind continues to deliver in line with our expectations. MicroMine is widely recognized by our customers for its value and performance. And year on year, we've increased our customer retention through the release of new feature packages. As we integrate our suite and offer more solutions through the cloud, more customers are adopting recurring licenses, increasing the quality and visibility of our revenue streams. Our qualified pipeline from warm introductions through the Minerals and ESCO networks has increased by 300%. Over the last six months, with the vast majority of these opportunities originating outside Micromind's home market of Australia. We are matching that pipeline growth with dedicated software sales recruitment to ensure we can convert into new licensed sales, and have seen new business at Tier 1 miners in Brazil and Chile as a result of warm introductions, as well as significant wins in Kazakhstan and Africa. The team we're building is a great fit for Weir, and we maintain voluntary employee retention above 90% as we scale sales force. With strong growth in licensed sales year on year, we're on track for our full year expectations of annual recurring revenue growth above 25%. Taking a step back, Weir offers compounding growth and resilience through the cycle, and we're well on track to achieve our annual commitments to shareholders, to outgrow markets, sustain industry-leading margins and cleanly convert earnings into cash and returns, all while doing the right thing for our people and the planet. I'll return in a few minutes to share some final closing remarks, but will now turn over to Brian to go through our detailed financial performance and the outlook for the full year. Thank you and over to you, Brian.

Thank you, John, and good morning, everyone. As John highlighted, our financial performance reflects strong order growth in the second quarter and improving operational momentum as we navigate the current geopolitical backdrop and a series of complex internal production transfers as part of the final work streams of our performance excellence program. In the first half of the year, orders grew by 8% as we saw weather-related mine site issues reverse along with an acceleration in demand during the second quarter. Revenue increased by 5% on a constant currency basis during the first half to £1.3 billion with contributions from acquisitions being partially offset by some deliveries being deferred into the second half. Customer demand patterns along with pre-planned production transfers compounded production complexity leading to additional costs and a lower mixed contribution throughout the first half of the year. While operating profit was stable, operating margins decreased by 100 basis points to 18.8% against a strong prior year comparator. Profit before tax of £196 million declined versus the prior year as we saw the annualized impact of higher interest costs relating to our recent acquisition activity. Free operating cash conversion of 41% reflects higher working capital outflows as we grew stocks to support order book phasing and production moves. In addition, we purchased 100% of our shares required for LTIP awards in the first half of 2026. We expect working capital to unwind in the second half and together with growing profitability remain on track to deliver our full year guidance of 90% to 100% cash conversion. Net debt to EBITDA was 2.2 times, primarily resulting from cash flow phasing. We expect our leverage to revert back toward our stated debt covenant range of 0.5 to 1.5 times at year-end as the working capital build unwinds in the second half. Finally, our proposed interim dividend of 20 pence per share represents a 2% increase year-on-year and reflects our confidence in achieving our full-year guidance. Turning to minerals, the division delivered excellent order growth in Q2, supported by healthy activity across key mining commodities, particularly copper, gold, iron ore, and oil sands. We also saw continued demand for our market-leading technology portfolio, while operational performance improved steadily throughout the year as we worked through the mix and production transfer challenges. Orders increased by 7% on a constant currency basis. Original equipment orders grew by 9%, reflecting continued investment by customers and strong demand for our differentiated solutions. Aftermarket orders increased by 7%, supported by positive activity levels across our major mining markets. Booked avail was $1.15 at the end of June. Revenue increased by 3% on a constant currency basis to £900 million, reflecting contributions from Townley, improving operational momentum as we deliver the order book. As mentioned earlier, reduced buying from unusual demand patterns in Q1 and early Q2, combined with the rescheduling of thousands of SKUs, leading to inefficiencies in our manufacturing plants. As a result, operating profit decreased by 5% on a constant currency basis to 181 million pounds, with margins reducing by 170 basis points to 20.1. With demand patterns returning to usual and production replan, we expect to deliver these backlog orders over the second half. Moving on to ESCO, the division delivered another strong performance, benefiting from healthy mining activity and contributions from our software solutions business. Micromine and Fastamine performed in line with expectations, with Micromine remaining on track to deliver annual recurring revenue growth of more than 25% in 2026. Orders increased by 10% on a constant currency basis. Underlying demand remained positive across mining markets, with strong growth in original equipment driven by mining bucket demand, particularly in North America and Australia. Aftermarket demand also improved through the period, supported by mining and construction activity and the return of dredging orders in the Middle East. The division delivered a book-to-bill ratio of 1.05, with mining markets accounting for 81% of total orders. Revenue increased by 11% on a constant currency basis to £369 million, reflecting continued strength in core mining markets, together with contributions from Micromine, Fastimide, and Estel. across software solutions, growth in annual recurring revenue remained on track with our full year expectations. Operating profit increased by 17% to 79 million pounds on a constant currency basis, while operating margins improved by 120 basis points to 21.5%. This performance was supported by lower cost sourcing initiatives in China and Chile, together with a growing contribution from a higher margin software solution businesses. Turning to group operating margins, which were 18.8% for the first half, a decrease of 100 basis points year-on-year. The key drivers of which of the margin outturn in the first half were a headwind of 130 basis points from mix in minerals, stemming from new projects as we enter an upturn in the mining CapEx cycle, and unanticipated aftermarket demand phasing between the first and second quarter. There was a tailwind of 100 basis points of further performance excellence savings, largely offsetting mixed headwinds as we deliver on the final work streams of the program. And finally, a 70 basis point net headwind due to higher production costs and delays caused by production transfers across the minerals business. As we look ahead to the full year, with the visibility we have of our order book and momentum in execution, we expect both mix and operational headwinds to unwind as we remain on track to deliver on our full year guidance. As per our commitment to bring accounting and operating performance in line, we saw a reduction in adjusting items year on year. Totally just 12 million pounds in the first half compared to 41 million pounds in the prior year. Total exceptional items for the half was a charge of 1 million pounds, which represents the step-up accounting gain on the acquisition of our SOJV, offset by 3 million pounds of acquisition and integration costs, and a further 12 million pounds arising from the unwind or the fair value uplift on inventory for SO and Townley. Other adjusting items reflect normal amortization of acquisition-related intangibles, which have increased as expected. Turning to cash, where adjusted operating cash flow decreased to 156 million pounds, reflecting increased working capital outflows due to the phasing of our original equipment order book, higher inventory levels to support production transfers, and reduced collections from debtors in June, much of which was just paid in the first two weeks of July. Working capital as a percentage of sales increased by 380 basis points to 26.7% at the half year. However, we see this reverting back toward our 20 to 21% target as operations normalize. CapEx was flat year on year at one times depreciation compared with 1.1 times in the previous year, while free operating cash conversion decreased to 41%, partially driven by the timing of share purchase for LTIP awards and increased working capital. As John mentioned, these effects will unwind in the second half of the year. Turning to cash flow, phasing of working capital during the first half and higher interest following acquisitions in 2025 reduced free cash flow to 1 million pounds. Following the completion of our ESSO transaction, net debt to EBITDA increased to 2.2 times on a lender covenant basis. However, given the second half bias of our cash generation, we expect this will reduce towards the high end of our stated range by year end. Turning to our outlook, we start the second half with a large order book, a strong demand backdrop, and improving operational momentum, all underpinning our existing four-year guidance reflected in current market expectations. We expect an acceleration of our project pipeline and positive mind-sight activity to support growth through the remainder of the year. We anticipate our high bid conversion rate and trial momentum to continue to Thank you for joining us. and combined with improved operating momentum expect to sustain margins above 20% for the full year. Finally, as operational momentum increases and working capital normalizes, we expect to deliver free operating cash conversion of between 90 and 100% at the full year. I'll now summarize the key messages from today's results. Market conditions across our mining markets remain positive, with strong activity levels across key commodities. Our markets, combined with the strength of our technology offering, is reflected in our active and growing pipeline of opportunities. Our financial performance improved through the first half, with a strong order book providing good visibility into the second half. We also continue to gain market share through our industry-leading total cost of ownership proposition and differentiated technology portfolio. Operational momentum is likewise improving. While minerals experience some short-term delays associated with production transfers, we are back on track and expect the full benefits of our operational execution and performance excellence initiatives throughout the second half. Overall, as we enter the second half, the combination of our strong order book and improving operational momentum underpin our full year guidance for growth in constant currency revenue, operating profit, and margins. Thank you, and I will now hand back to John for closing remarks. Thanks, Brian.

Now, with this being my last results presentation as CEO, I want to close by saying that it's been truly an honor to lead this remarkable company over the last decade and to thank you for both your support and constructive challenge over the years. When you start the journey as CEO, your hope is to leave the company in a stronger position than when you inherited it. And as I reflect, it is certainly a very different Weir to the one of 10 years ago. We've gone through a strategic portfolio realignment to focus on mining and capitalise on the multi-decade opportunity it presents. The business has delivered growth through the cycle and through the performance excellence business transformation has achieved operational efficiencies and a platform for annual operating margins sustainably above 20%, all while reducing CO2 emissions and embedding a strong safety culture. Weir Group PLC, Jonathan Adam Stanton, Brian Michael Puffer, Garry Fingland, Rosemary McGinness, Demand for critical metals continues to build and customers are increasingly recognising the need for new, more efficient solutions to unlock future supply. For Weir, there's a clear pathway to sustained growth, delivering mining technology for a sustainable future. So I am satisfied that I'm leaving Weir in great shape, with a clear strategy and strong prospects. The company is set to become the preeminent provider of mining technology solutions across both hardware and software, poised for our next phase of accelerating growth and well positioned to deliver long-term superior performance for our customers and shareholders. In Andrew, you have an experienced and hugely talented leader and I'm confident that he, together with Brian and the wider team, will continue to take Weir from strength to strength. Thank you. and Brian and I will now be happy to take any questions.

With that, we can start today's Q&A session. If you would like to ask a question, please press star followed by one on your telephone keypad. And to withdraw your question, it's star followed by two. Our first question today comes from Kit Thinner from JP Morgan. Your line is now open. Please go ahead.

Hi, good morning, guys. Thank you for taking my questions. I have two, please. So firstly, just on the margin bridge for H2, thank you for providing colour on the margin bridge in H1. Maybe if you could provide some of the sort of detail for H2. And I previously mentioned about 80 bits of investment costs for the full year and about a bit of a tailwind from M&A. So just wondering how we should expect this phasing into H2. My second question is just on your pumps growth. I know you've mentioned in a bit of detail with regards to the trials that you've been running, but perhaps you could shed a bit more light on the competitive landscape that you've seen, especially when some of your Western peers have been talking about market share gains. And then also if you could just touch on pricing in this context. I believe you've implemented about low single-digit price increases. Thank you.

Good morning, Chip. Thanks for the questions. Let me deal with the pumps and pricing point first, and then Brian can come back on the margin so yeah I think you have seen from the presentation we wanted to give a fair bit of color in terms of the success we've been having in the pump market and you saw the stats that we've won 70% of OE tenders for new equipment and more than 90% of pump trials which we approach on both an attack and a defense basis so we're All we doubt in the market looking at mines where we do not have in store base and seeking to position our pumps on a trial basis to be able to take over those positions from our competitors. But also occasionally that happens to us with competitors offering something different to what we're offering. So we attack and defend through those pump trials. As you see, the success, I think, really, really speaks for itself. And when you step back with roughly 50% market share ourselves in pumps and winning 70% of OEE pumps coming through and more than 90% of trials, we continue to inch up our market share. That's just the maths of the numbers that I've given you there. So I appreciate that, you know, we have a fantastic franchise in pumps with all the strengths that you know and love. And it's, you know, through the cycle, I've seen that over all of the 16 years I've been at Weir, you know, it's something that our competitors you know look to as an opportunity but year after year we continue to defend our position really strongly and I think the combination of the technology we have which never stands still and the customer service and intimacy that sets Weir apart means that you know that model is absolutely rock solid and resilient and will continue to deliver and I also wanted to point out that you know those wins those pump trials were also against all competitors so be they The European peers or the Chinese as well. That is our total global success rate. So again, very, very confident in the position that we have and the ongoing sustainable resilience that it will demonstrate. On pricing, I think we're exactly where we thought we would be halfway through the year. We said it's a low single digit pricing environment at the moment. There's quite a bit of cost consciousness out there. among our mining customers at the moment. You know, clearly from an OE point of view, it can be a bit more competitive at the earlier point of the capex cycle and that tends to moderate over time. But for now, the realization that we're getting in pricing is absolutely in line with that low single digit expectation that we had at the beginning of the year. So with that, Brian, margins?

Yeah, thanks, Chip, for the question. If you look at margins, as I said with H1, We had the tailwind with the performance excellence that contributed about 100 basis points increase to margins. But we had two things offsetting that in the first half. First, we had an unexpected mix within aftermarket. With the wide variety of products we've had, we saw a different level of mix that we've seen previously. That contributed a portion of the 130 basis points decrease that is in the bridge in the slide pack. And the other part of that was, as John said, is we entered this cycle in the early phase of that cycle. Pricing sometimes is a bit more intense, so we've seen a little bit on the OE side there. The good news is that aftermarket mix that we saw, if you look at the order book, we see that reversing in the second half. So that should be coming back. The business excellence or performance excellence will be increasing to 120 basis points in the second half. And then the last bit that was a headwind in the first half was the delays in some of the production transfers and some of the work we needed to do led to some higher costs in the first half. And that had a 70 basis point impact in 1H. Once again, that will reverse in the second half. So we see us being sustainably above the 20% margins as we've discussed. and we're quite comfortable with the operating profit that's currently in the published guidance, hence why we said that guidance is underpinned. So the last part of your question regarding the impacts of the S4 program, the S4 program is kicking off, but it's more second half weighted, and we'll probably see that that impact will be slightly less than originally expected in the first half. I think we had 70 to 80 basis points in there. It's probably half of that for the full year 2026. So hopefully that answers your questions on those, and thanks for the questions.

Very clear. Thanks both. And all the very best, John. It's been a fantastic tenure. Thank you.

Appreciate that.

Our next question comes from Jonathan Hearn from Barclays. Your line's now open. Please proceed.

Yes, good morning guys. I have three questions if I may. Firstly just focusing on obviously that strong OE growth that you saw in the second quarter. Obviously from the commentary you expect that to continue through the remainder of this year and I suspect into 2027 as well. Can you just talk about how we think about margins and mix going forward? I mean, I know historically you've said Weir can do between a 20% to 22% margin, but when we kind of look at a group, do we think at least, I suppose the near to medium term, it's more towards that sort of 20% as you get an adverse mix? That was the first question. The second question was actually just on your sort of vertical sub mills. Obviously, you know, good order growth in the first half. Can you talk us through maybe in a little bit more detail about that AM opportunity? Is this sort of the annual spares that Oyin at sort of 30% level or is it essentially a higher aftermarket opportunity, those vertical sub mills? And then the third question maybe for Brian was just in terms of that sort of working capital, obviously big outflow. We did see some customer payments sort of be extended essentially. Do you think there's scope for that to continue in the second half or was those sort of extensions of payments from your customers just run off?

Thanks. Thanks, Jonathan. Let me take the first two and then, you know, I just want to make the point I've been making for a little while on margins and thinking back to the capital markets event last December. You know, the whole setup of where we wanted to go with margins was to achieve, you know, the floor of 20% operating margins because we think that is the gold standard for, you know, industrial companies who are seeking to earn a badge of, you know, a high quality compounder. And so, you know, the whole setup has been, say, we want to get there as rapidly as we can and then over time sustain ourselves as a 20% plus operating margins company. Now, you know, some people are saying, well, just can you keep expanding those margins up and up and up? Well, I don't think that's right for the business because of two things. First of all, the next phase for Weir, which Andrew is going to lead, is all about growth. It's all about taking advantage of the growth that is going to be available in this market through our technology and innovation, through the CapEx cycle that's coming. to our resilient aftermarket model. So this opportunity ahead over the next few years is really about growth and accelerating that growth and delivering on that. And that will deliver, if we deliver on that growth and we execute well, that will deliver outstanding returns and we will see our return on capital employed significantly increasing. So that's the backdrop. We don't want to be doing anything short term, but it means we're not investing in that growth. and secondly our customers do look at our margins and we just need to be mindful of how they're feeling if our margins are marching ever upwards. So it's with that context that 20% is the floor, that's where we very much intend to stay, that's the whole setup of the company and from here it's really about accelerating growth and returns. In some years, may it be higher with a positive mix or whatever, of course, but we don't want to be on a conveyor belt where there's expectations it's going to go ever up and up. That's just not realistic. It's not the right thing for the business. And then on the vertical stirred mills opportunity, yeah, obviously, we're very mindful that across all of our portfolio projects, that kind of classic ratio that you've seen with Weir of 30 cents of aftermarket every year for as long as that equipment remains in the mine for a dollar of OE and the vertical stirred mill that we have developed is bang in line with that average for the division. Not quite as high as the very best mill circuit pumps but bang in line with our overall average for the division so the aftermarket is expected to be 30 cents in the dollar after we sold the equipment once it's commissioned on an annuity basis. Brian, on the payments.

Yes. Thanks, Jonathan. In terms of – it's probably a wider question on the working capital. Cash conversion was 41%. I think the first thing to note is from a seasonality standpoint, we are generally somewhere between 55% and 65% in terms of cash conversion. and there's really three things to talk about on why it's lower this half year. The first is we purchased the LTIP shares in the first half of this year as opposed to the second half like we did in 2025. That had about a 5% impact. That will not repeat in the second half of the year. The second one is around inventory. You look at the strong order book that we just printed here in the second quarter for the first half. And you look at the book, the bill of 1.12. We needed to build up this inventory to deliver that in the second half. And as you see, our revenue is 45.55. So in terms of the split, 1H to 2H. And so we have that higher inventory level that will burn down over the second half. So you'll see that convert into cash. which leads to the last point is around debtors and you rightly called out that debtors increase. And what we saw at the end of June is our current debtors that are normally zero 30 days and paid at the end of June Weir Group PLC, Jonathan Adam Stanton, Brian Michael Puffer, Garry Oyinlola, Chris Palmer So, you know, we remain very comfortable to be within the 90 to 100 percent range that we guide towards. But those were the impacts for 1H and why we're happy that they will reverse in the second half.

Great, very clear. And John, I'd just like to say thank you for all your insights on Weir Group over the last 16 years. It's been great to see the company transform into pure play mining equipment leader under your tenure. And obviously you've done some big things. You've exited flow control and obviously the volatile oil and gas business. So best of luck for the future and the next chapter ahead.

Thanks, Jonathan. And for your support as well. I know you were one of the first analysts I met 16 years ago when I joined the company. So I've appreciated working with you over the years.

Yeah, it's been great. Thank you.

Our next question comes from Tor Fangman from Bank of America. Your line is now open. Please go ahead. Thank you.

Good morning, Jon and Brian. First of all, as well, all the best for you, Jon. And secondly, looking very much forward to meeting you as well, Andrew. Thank you for taking my questions. Just two from my side. First would be a clarification on the market share punt. FLS is winning market share, MADS is winning market share, you are winning market share. So could you please give us a little bit of insight on who's actually losing market share out there? Or are we maybe focusing on the wrong type of pumps? I mean, there's many different pumps in the flow sheet. And are you maybe focusing on like a different value portion of the overall portfolio? Any insights would be super helpful. Thank you.

Well yeah I mean thanks for the question and I think you know what I would say is that as far as I can see we're the only people actually putting some numbers out there so I think you know our statements about market share are backed by those percentages as I talked about earlier in terms of share gains on pump trials and share gains on OE. You know and beyond our European peer group you know there are Chinese and local replicators here and there so you know it may be that our peers are taking market share from some of those guys but it's certainly not coming from us we're definitely not in the business of donating market share to anybody quite the reverse now do we focus you know what our business model is it's razor razor blade as in the answer to my last question Jonathan I said we like that 30 cents on the dollar so we do we're very disciplined in maintaining that in the bids that we go for so you know if For example, there are very light duty slurry or water pumps that don't have the aftermarket. We are not going to go after those and sort of lowball pricing to win those because there's no aftermarket capability. And so that may be a factor in there, but we're very focused on big mill circuit, heavy duty, high abrasion in the best parts of the mine that continue to deliver that razor blade model, which is why That is super helpful, thank you. And then just lastly...

A bit more macro, if we think about the upcoming FIDs, especially in the copper space across regions, but a lot of this in the Americas as well, do you have any view on the timeline of this? Is it moving closer? Are the permittings now speeding up a little bit? Anything you could give us on detail on like large equipment orders to come would be super helpful. Thank you.

Yeah, so it's a good question. And as I highlighted in the presentation, we are definitely seeing good progress in the Americas, actually in North America with now all of the political weight of the current administration and many of the departments within the current administration having their own critical minerals policy. There is a lot of focus on that in the US and more broadly in North America. and for some of the smaller projects we've already seen some of the initial pump packages and orders coming through in the first half of this year which one of the things that supported the good OE orders that we've seen as and particularly as they strengthened in the second quarter a lot of that came through in North America for some of the smaller projects now you know there are potentially larger ones to come and that is very much the case in Latin America at the moment again with the changing government there in November last year we've got a very very different political perspective on the copper industry in Chile and now also with the recent elections in Peru that is also pretty helpful as well and also Argentina you know obviously we've had that sort of more pro-growth government over the last couple of years and the projects in Argentina have been progressing as well So, you know, there's a long list of projects. As ever with these projects, it's difficult to predict when exactly that they will come through, but the activity levels are much higher. We know through our conversations with the EPCMs, the EPCs, they're very, very busy on mining projects at the moment. We're working closely with them on flow sheets across the piece. So, you know, difficult to predict exactly when, but it's certainly a more positive environment and more encouraging and we've seen in the last little while so I think it'll be exciting to see how that plays out over the next 12-24 months but it does feel like we should see some of those larger project starts come through.

Thank you, thank you John and then sorry one more quick one for Brian maybe. In the recent prints you've highlighted to target a 50 base points margin expansion and on this print do you left it out and basically flagged you. You're targeting the over 20% margin. Is this deliberate? Any take on this? Thank you.

Thanks for the question, Tori. As we've always said, we want to have industry leading margins and be sustainably above 20% and that's what we're committing to and looking at the Operating Profit that's in the published guidance. We're comfortable with that. With all the moving parts that are currently happening and potentially the start of the CapEx cycle, it's not that we're moving away from anything, but trying to get everything to the last 10 basis points or 20 basis points is nearly impossible. So I think what you should take away is we're very happy with what is published guidance out there. We're sustainably above 20% and we're trying to drive and we'll drive industry-leading margins.

Super helpful. Thank you both.

Our next question comes from John Kim from Deutsche Bank. Your line is now open. Please go ahead.

Hi, good morning. Thanks for the opportunity. I'm wondering if I could have two questions, please. First, if we think about the... changing paths to market in ESCO. And I'm speaking to the Chilean distribution relationship. Any sense of magnitude of phasing on how this might change numbers there? And then secondly, if we think longer term, let's call it three to five-year view, which end markets or regions do you think on balance are the most interesting for incremental opportunities? I imagine given kind of a five-year time frame, you have some sideline already on RFPs.

Yeah, great question. So I think it's been a long journey to finally get that direct relationship going in Chile and buy out the JV, but we were delighted to get that over the line this year. And we're super excited what it does for ESCO because I think when we look at our market share in Chile today compared with, say, Peru just up the road or where ESCO is, in North America. Our market share in Chile is probably a third of what it is in those markets where we have 50% plus market shares. So the opportunity is very, very significant in terms of going after that and bringing new customers over to ESCO in that market. It's not going to happen overnight. The focus so far this year has been very much on transitioning the existing customer relationships from our distributor back into Weir, setting up the direct footprint, leveraging the minerals footprint big time in Chile I might add, so that we can get boots on the ground in those mines with ESCO sales people and start to get that going. Very happy to say that all those customers transitions are complete, no balls dropped in terms of making sure that those customers were properly served and now the focus is very much on how we start to go after that market share and do what we've very successfully done with ESCO all around the world. Again, coming back to having the best wear life, best technology, best customer intimacy. That's how we win in the market and we're very, very focused on seeing that through in Chile. And yeah, over our sort of three to five year strategic horizon planning, we expect to see those market shares increase quite significantly. And it's also not unhelpful from a margin point of view as well because obviously we're cutting out the third party who take a portion of the margins. And also we get direct control of the foundry in Chile which gives us more low-cost capacity for production of GET. It's the second lowest cost per tonne in the ESCO network of foundries after China. So for us it's kind of a win-win-win opportunity for all those things. So yeah, we're very excited about what that can deliver over the next few years and the team's really fired up to get after it.

Thanks very much. Could we then pivot to my second question about which regions you think are the most interesting from a five-year perspective?

Yeah, look, I mean, I think, sorry, I forgot that. Apologies. Look, I mean, I think the Americas are, you know, they are becoming our strongest growth markets currently. And when you look at the project pipeline, I think that's probably where across the business we are going to see you know the strongest growth over the sort of medium term and you know when you look at and it's sort of pivoted I think in the last two or three years so go back to two years then there was all the lithium mines being built in Australia you know Australia was was very very busy and that sort of plateaued a little bit for now so I think I would point to the Americas but just just also with ESCO in mind specifically I think We've still got quite a lot of countries around the world where in Central Asia, in Africa, in the Asia-Pac region where we've still got probably lower market shares than we would like and there is opportunity. So on a regional basis, ESCO still has more to do to get the balance of revenues across the world relative to the Americas. So I think, again, it's quite a nice position in that There's good growth coming in the Americas because of the project pipeline and the opportunity in Chile for ESCO. There's also more that we can do around the world. And over the last year or so, we've developed a strategic selling program. Where do we have lower market shares or no share that we think we can go get? And systematically, the sales team around the world is going after those. So again, for ESCO, it's very much about pivoting to growth with those levers to pull on. Hope that helps.

Great. Thanks very much. Best of luck in the future, John. Thank you.

Our next question comes from Edward from UBS. Your line's now open. Please proceed.

Thanks, John, Brian, and Andrew. Thanks for the question. Maybe just one for me, given the time. You outlined in the release strength in oil sands, and I guess this has been a bit of a headwind alongside coal. for a couple of years now. Do you have a common thing on the outlook for these two commodities given the high energy prices? Are we expecting a sustainable uptake from here?

Yeah, I think as we look at oil sands, I wouldn't say that we've had headwinds in the oil sands. It can be slightly more cyclical obviously than some of the hard rock mining customers that we serve. With a lower oil price, it's been flat rather than facing headwinds, I would say. but clearly with current oil prices then and what the US is trying to do in terms of re-industrialising in the UK I think it's very positive for that market at the moment and so we're seeing strong aftermarket orders but also some projects, some efficiency related projects and some brownfield expansion investments going on at the moment which are encouraging so We expect to see that continue as we move forward. You know, is there going to be massive new CapEx up in the Canadian oil sands? Probably not. But, you know, you've got all of that investor base there. And I think it's going to be a very solid part of our business for a long time to come. And, you know, the aftermarket is the aftermarket. You know, it's very actually oil sands are probably one of the most abrasive mining operations that we serve so it's a very attractive aftermarket so it's a good place to be and I think as I say it will be pretty solid through the cycle as we move forward. Coal is now you know the outlook is probably looking better in certain markets given some of the geopolitical activity that we've talked about albeit it is really really small part of our portfolio as we sit here today you know you're kind of down into the sort of single digits of revenue now so you know and it's It's not an area that we'll continue to serve those customers where they need us and continue to drive technology to make it as sustainable as possible, but it's certainly not something that we see as a big growth driver moving forward.

Brilliant. Many thanks and best of luck for the future, Sean. Thanks, Ed.

Our final question comes from Andrew Douglas from Jefferies. Your line is now open. Please proceed.

I always like to have the final word. Just two small ones for me. In terms of M&A going forward, you've talked about a pipeline. Can we talk about what that pipeline looks like in terms of where you want to go with M&A? Clearly, we've had a number of software acquisitions over the years. It does seem like the customer base occasionally wants a full flow sheet. So whether would there be more focus on product acquisition? Acquisitions going forward. And secondly, just on the commentary regarding the strength in Americas. I appreciate there's North and South America, but maybe North America is not your strongest point. Town Leeds helps you there. Do you think you need more M&A in North America to benefit from all of the opportunities that are coming there? Thank you.

Yeah, thanks Andy, and I'm delighted you heard the final word. You'll forget about that. You're the second analyst who's asked a question who I also knew from 16 years ago, so good to work with you. Yes, on M&A, I think, look, we've been very focused in 2026 and continue to be focused on delevering to create more balance sheet headroom to go and invest in further bolt-ons in the future. But as we do that this year, then the focus has been very much on refilling the pipeline of opportunities so that as we get into next year and beyond with that balance sheet capacity we can hopefully pull the trigger on some other acquisitions and actually the things that we're focusing on hasn't really changed very much I mean obviously we've built the digital software platform so further technology bolt-ons is certainly on the agenda but equally product infills and geographic infills are also things that we are you know also also keen on doing where it makes sense and we can see through disciplined M&A that we can create returns and add value. So the three buckets really haven't changed and as ever with acquisitions it tends to be opportunistic. You need willing buyer, willing seller so you can never say we're going to focus on this bucket this year or so on. It depends what actually comes to market and we're able to acquire. So we sort of keep our options open to a degree but I think the pipeline is looking really good actually across all of those buckets as we start to build it back up. And so Andrew and Brian are very focused on that and will take the lead, obviously. Specifically in the Americas, I think Townley really gave us what we wanted in terms of a North American foundry, which is something you may remember, Andy, given your tenure, that we've talked about many, many times over the years. So having that capacity, and particularly with the current administration's Kind of reassuring of manufacturing and industrialization is perfect timing. It's a great asset to have now within our manufacturing portfolio. It got us into the phosphate market in Florida, which, you know, is also a good position to be over the long term. So, you know, might there be smaller bolt-ons in North America in the future? For sure. but for now I think we've got you know really what we need so it's not something I would specifically say you can expect to see more of in the next year or two you never know again it depends on what comes up but and the focus is clearly on globally on what we can bring into the portfolio that's going to help deliver compounding returns you know wherever that may be in the world.

Okay, perfect. Thank you Jonathan and thank you for all your help and support over the last 15-16 years and I wish you well.

Thank you Andy, thank you very much. Take care.

That concludes the Q&A portion of today's call and I'll hand back over to John for closing comments.

Yeah, thanks very much and thanks everybody for attending the call and your questions and as usual we'll be available over the coming days for any follow-ups and I just want to add that I appreciate a few things to digest after the softer first quarter, but I'm delighted with the progress that we've made through the second quarter. And I think reflecting what Weir has shown over the years is that we have made excellent progress year on year on year through our transformation. And I see this year as being absolutely no different to that. You may get the occasional lumpy quarter, as we saw in Q1. but the model is incredibly strong and resilient and it will sail through that. The company's in great shape, got a fantastic business model and a powerful engine for accelerating growth and returns ahead and then Andrew, you've got an incoming leader. I've worked with Andrew for 16 years. He's the right man to take it forward and to go on and take Weir to the next level and I'm really looking forward as a major shareholder for many years to come to cheering on from the sidelines. So I wish Andrew and Brian and the team every success in the future and I'm sure they will deliver it. Thank you very much.