Weir Group PLC
LSE:WEIR
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Weir Group PLC
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Good
morning,
everyone
and
welcome
to
Weir's
Full
Year
Results
Presentation.
I'm
joined
today
by
our
CFO,
John
Heasley
and
we'll
follow
our
usual
format.
So,
after
some
opening
remarks
for
me,
I'll
hand
over
to
John
to
take
you
through
the
financial
review
in
detail.
I'll
then
return
with
a
business
review
and
strategy
update
before
we
open
up
for
questions.
Ricardo
Garib,
President
of
our
Minerals
division
and
Andrew
Neilson,
President
of
ESCO
are
also
here
with
us
for
the
Q&A.
Before
I
start
our
presentation,
I
would
like
to
say
a
few
words
on
the
shocking
events
in
Ukraine
which
have
rapidly
escalated
over
the
last
week.
Our
first
priority
has
been
the
safety
of
our
impacted
colleagues
and
their
families,
and
our
thoughts
are very
much
with
them.
We're
doing
all
we
can
to
support
them
through
this
very
difficult
and
dynamic
situation.
I'll
say
a
little
more
on
the
business
context
of
these
events
later
on
in
the
presentation.
But
first,
I'll
move
on
to
reflect
on
2021.
2021
has
been
a
milestone
year
for
Weir
on
many
fronts
not least
because
it
marked
150
years
since
the
company's
foundation.
It
also
saw
us
complete
our
strategic
transformation
into
a
premium
mining
technology
business
and
the emergence
of
the
new
Weir
that's
being
positioned
to
take
advantage
of
highly
attractive
opportunities
that
lie
ahead,
and
which
is
already
demonstrating
the
benefits.
It
was
also
a
year
characterized
by
an
extremely
complex
operating
environment
exacerbated
by
the
cybersecurity
incident
we
had
to
deal
with
in
the
fourth
quarter.
So,
let
me
start
by
giving
you
the
headlines
from
these
results.
In
2021,
we
delivered
very
strong
order
growth
which
accelerated
later
in
the
year,
and
we
expanded
our
operating
margins
despite
the
external
challenges.
We
remain
on
track
to
deliver
our
medium-term
financial
and
sustainability
goals
where
we
see
a
clear
pathway
to
17%
operating
margins
and
have
added
new
operating
cash
conversion
targets
and
are
enhancing
our
CO2
reduction
targets.
2021
has
seen
a
real
strengthening
in
global
commitments
to
take
action
on
climate
change,
adding
impetus
to
the
opportunity
for
Weir
to
enable
the
ongoing
and
transformational
shift
in
the
environmental
performance
of
the
mining
sector.
We
continue
to
deliver
world-beating
technologies
today,
and
we're
upping
our
investment
in
the
next
generation
of
technologies
that
will
make
mining
smarter,
more
efficient
and
sustainable.
And
we're
making
these
investments
because
we
believe
the
structural
growth
opportunities
in
our
markets
are
going to
be
phenomenal
for
many
years
ahead.
Our
performance
reflects
the
fundamental
strength
of
our
business
and
is
testament
to
the
magnificent
efforts
of
everyone
across
the
company.
It's
not
been
an
easy
year,
and
I'd like
to
personally
thank
all
of
our
employees
for
their
commitment
and
hard
work
to
overcome
the
challenges
we
faced.
Speaking
of
challenges,
I
wanted
to
deal
with
the
cyber
incident
up
front.
I'm
pleased
to
say
that
the
attack,
which
we
flagged
in
October,
is
now
behind
us,
and
we
finished
the
year
well.
Internally,
it
has
been
hugely
disruptive,
and
so
I
just
wanted
to
give
you
a
flavor
of
how
we
have
dealt
with
it
and
how
we
emerged
stronger
from
the
experience.
Our
security
operations
team
first
detected
suspicious
activity
in
late
September,
and
it
quickly
became
clear
that
the
initial
breach
was
escalating
into
a
very
sophisticated
human-controlled
ransomware
attack.
We
acted
quickly
to
contain
the
threat
actors
and
took
down
all
of
our
corporate
Internet
activity
and
connected
devices.
Well,
this
meant
a
shift
to
manual
processes
for
a
period
of
time.
It
enabled
us
to
quickly
contain
the
attack,
avoided
a
full
shutdown
of
our
business,
and
we
saw no
evidence
of
any
exfiltration
of
our
data.
It
also allowed
us
to
move
rapidly
on
to
recovery
and
restoration,
according
to
business
priority,
which
continued
through
to
the
end
of
the
year.
The
financial
impact
of
£25
million
at
the
lower
end
of
our
guidance
range
was
a
good
outcome
in
the
circumstances,
and
John
will
go
into
more
detail
on
how
that
breaks
down
in
the
financial
review.
But
it
was
transitory.
We
did
not
engage
or
pay
any
ransom.
And
by
the
end
of
January,
we
were
largely
back
to
normal
operations,
having
delivered
an
uninterrupted
level
of
customer
service
throughout.
The
impact
of
the
attack
touched
everyone
in the
business
in
one
way
or
another
and
consumed
a
lot
of
time
and
resources.
But
we've
learned
a
lot
and
emerged
stronger
with
an
even
more
resilient
IT
infrastructure.
The
way
our
teams
responded
and
adapted
to
keep
delivering
for
our
customers
has
been
outstanding,
exemplifying
everything
that
is
so
special
about
the
culture
and
attitude
at
Weir.
The
cyber
incident
was
a
pretty
major
bump
in
the
road
but
we
had
to
deal
with
it
and
it
did
not
stop
us
making
strong
strategic
progress
in
the
year.
Among
the
highlights
in
the
year
were
maintaining
best-in-class
safety
standards
and
staying
focused
on
safety
despite
the
operational
disruptions
caused
by
the
cyber
incident;
winning
large
orders
for
sustainable
solutions,
such
as
high
pressure
grinding
rolls
and
electric
dewatering
pumps;
acquiring
Motion
Metrics,
strengthening
our
ability
to
offer
data-led
insights
and
accelerating
our
broader
digital
strategy
while also
increasing
R&D
spend
to
1.7%
of
revenue,
committing
to
set
science-based
targets
in
2022
to
further
drive
reductions
in
our
Scope
1, Scope
2,
and
Scope
3
emissions,
improving
gender
diversity
at
senior
management
levels
by
4%
to
26%,
and
announcing
the
forthcoming
appointment
of
Barbara
Jeremiah
as
the
first
woman
to
Chair
Weir.
So,
pleasing
progress
across
all
aspects
of
our
strategic
priorities
which
I'll
build
on
shortly.
But
first,
I'll
hand
over
to
John
to
take
you
through
the
numbers.
John?
Thank
you, Jon,
and
good
morning,
everyone.
2021
was
characterized
by
excellent
order
growth
with
revenues
and
operating
profits
showing
more
modest
progress
after
being
negatively
impacted
by
the
cyberattack,
albeit
our
actions
ensured
that
the
impact
was
minimized
to
the
low
end
of
the
range
that
we
outlined
in
October.
Orders
at
£2.2
billion
increased
22%
with
the
second
half
seeing
our
latest
cycle
aftermarket
really
accelerate
across
both
divisions.
Revenues
at
£1.9
billion
or
2%
up
on
last
year
which
combined
with
the
strong
orders
through
the
second
half,
meaning
that
the
book-to-bill
1.14%
and
resulted
in
a
record
order
book
at
the
start
of
2022.
Operating
profit
of
£296
million
was
5%
higher
than
last
year,
with
the
impact
of
the
cyber
incident
being
limited
to
the
lower
end
of
the
previously
guided
range
of
£25
million
to
£40 million,
with
£10
million
of
overhead
under-recoveries, £10
million
of
lost
profit
on
revenue
slippage,
and
£5
million
of
direct
costs
which
have
now
been
treated
as
exceptional.
Operating
margins
improved
by
40
basis
points
to 15.3%
with
the
impact
of
freight
and
raw
material
inflation
being
fully
mitigated.
Profit
before
tax
of
£249
million
was
in
line
with
last
year
including
an
FX
translation
headwind
of
£15
million with
EPS
at
£0.713
per
share.
Operating
cash
flow
was
more
impacted
by
the
cyber
incident,
but
even
so,
net
debt
to
EBITDA
was
1.9
times
and
keeping
with
our
capital
allocation
policy.
I
will
now
turn
to
provide
some
detailed
commentary
on
each
of
the
divisions.
Starting
with
Minerals,
as
expected,
we
saw
strong
market
conditions
reach
our
later
point
in
the
cycle
with
OE
orders
starting
to
convert,
and
aftermarket
demand
build
through
the
year
to
reach
record
levels
in
Q4.
Those
market
conditions
continue
to
be
supported
by
strong
commodity
prices
and
demand
for
energy
and
water-efficient
solutions
for
expansion
and
upgrade
projects.
On
the
project
side,
key
wins
in
the
first
half
included
the
Ferrexpo
HPGR
order
for
£36
million
and
the
Indonesian
electric
dewatering
pump
order
for
£33
million
supporting
57%
OE
order
growth
in
H1.
The
second
half
was
characterized
by
solid
conversion
of
smaller
brownfield
and
expansion
projects
still
driving
34%
growth
in
H2.
HPGRs
and
associated
comminution
products
continue
to
be
a
key
growth
driver
with
orders
up
60%,
representing
7%
of
the
total
division.
Regionally,
we've
seen
strong
growth
across
the
board
with
standout
performances
in
Asia,
Africa,
and
North
America,
which
all
bounced
back
strongly
from
a
COVID-impacted
2020.
[indiscernible]
(00:09:21) orders
22%
higher
with
OE
up
45%,
and
aftermarket
up
13%.
Q4
aftermarket
orders
were
up
29%
year-on-year,
and
19%
sequentially,
reaching
record
levels
in
absolute
terms.
Revenues
were
1%
lower
than
the
prior
year
with
aftermarket
up
2%,
and
OE
down
8%
with
a
non-repeat
of
£80
million of
Iron
Bridge
OE
revenue
from
last
year
and
the
impact
of
the
cyber
incident,
which
net-net
meant
we
saw
a
bit
a
week
of
revenues
slip
into
2022.
Book-to-bill
at
1.16
means
we
enter
2022
with
a
record
order
book.
Operating
profit
increased
by
£1
million
in
a
constant
currency
basis
to
£251
million
with
margins
up
20
basis
points
to
17.7%
with
the
benefits
of
mix
and
efficiency
gains
being
offset
by
cyber-related
overhead
under-recoveries.
While
inflationary
pressures
across
raw
material
and
freight
were
significant
in the
year,
we
managed
to
maintain
gross
margins
at
a
product
level
through
a
combination
of
focus
on
material
recycling,
robust
supplier
negotiations,
and
aftermarket
price
increases.
The
aftermarket
revenue
mix
increased
in
the
year
to
71%
compared
to
69%
last
year,
providing
a
margin
benefit
of
around
60
basis
points.
As
we
expected,
while
some
of
the
temporary
cost
savings
realized
last
year
such
as
bonus
and
T&E
returned,
these
were
largely
offset
by
lower
levels
of
under-recoveries
as
we
face
fewer
COVID-related
plant
disruptions.
However,
the
division's
operations
and,
therefore,
H2
margins
were
impacted
by
the
cybersecurity
incident,
which
resulted
in
an
estimated
£10 million
of
under-recoveries
with
the
slippage
of
around
a
week's
revenues
also
having
about
a
£10 million
impact
on
operating
profit.
Moving
briefly
to
the
next
slide,
our
margins
continue
to
be
supported
by
operational
efficiencies.
These
included
a
refresh
of
the
Weir
production
system
that
assesses
every
production
and
service
facility
against
the
standard
set
of
lean
criteria,
as
well
as
further
progressing
our
back
office
shared
services
rollout.
On
the
operational
side,
we
consolidated
two
facilities
in
China,
thereby,
realizing
overhead
savings
while
optimizing
our
foundry
network
with
an
upgrade
in
Australia.
In
the
back
office,
we
continue
to
roll
out
our
finance shared
services
such that
70%
of
the
group
is
now
covered
by
a
common
shared
service
function.
We
expect
that
to
increase
to
90%
over
the
course
of
2022.
And
as
set
out
in
our
strategic
framework,
some
of
the
benefits
of
these
activities
have
been
and
will
continue
to
be
reinvested
in
R&D
as
we
look
to
achieve
our
medium
term
investment
target
of
at
least
2%
of
revenues.
Moving
on
to
ESCO
where
we
experienced
similar
mining
market
conditions
as
the
Minerals
division,
with
mining
orders
running
at
significantly
higher
levels
than
last
year
as
machine
utilization
returned
to
pre-COVID
levels.
Infrastructure
and
construction
markets
in
Europe
and
North
America
recovered
strongly,
supported
by
easing
of
COVID
restrictions
and
government
stimulus,
resulting
in
record
order
levels.
Total
orders
have
now
increased
sequentially
for
six
straight
quarters
with
Q4
orders
37%
higher
than
last
year
and
7%
sequentially,
leaving
the
year
25%
ahead.
Revenues
were
up
11%,
lagging
orders
due
to
phasing
and
lead
times.
This
was
demonstrated
with
H2
revenue
being
up
20%,
compared
to
1%
in
the
first
half.
And
with
book-to-bill
at
1.07,
the
highest
since
we
acquired
the
business
in
2018,
we
carry
a
strong
order
book
into
2022.
Operating
profit
at
£83
million
was £8
million or
11%
higher
than
last
year,
with
margins
up 10
basis
points
at
16.3%.
The
margin
performance
was
especially
pleasing,
given
the
significant
raw
material
and
freight
inflation,
which
is
more
impactful
than
in
Minerals.
This
is
due
to
exposure
to
North
American
steel
plate
and
ESCO
centralized
manufacturing
model,
which
results
in
more
freight
costs.
Both
those
input
costs
more
than
doubled
in
the
year.
Our
market
leading
position
allows
us
to
be
the
price
setter
unless
pricing
power
is
what
has enabled
us
to
maintain
gross
margins
through
a
series
of
price
increases
and
surcharges
as
appropriate.
As
highlighted
in
July,
H2
margins
were
slightly
lower
than
H1
which
benefited
from
the
phasing
of
sales
price
increases
and
advance
of
input
costs
given
extended
period
purchase
agreements.
You
will remember
that
last
year,
ESCO
profits
benefited
from
COVID-related
temporary
cost
savings,
such
as
bonus
and
T&E
with
no
significant
offsetting
recovery
impact.
As
these
costs
have
largely
returned
this
year,
they've
been
offset
by
the
leverage
benefit
of
higher
revenues
and
ongoing
efficiency
savings.
These
factors
resulted
in
an
operating
margin of
16.3%,
up
10
basis
points
from
last
year,
and
we
remain
on
track
to
achieve
our
medium
term
target
of
17%
set
at
the
time
of
the
acquisition.
Now,
bringing
things
together
to
look
at
the
group
operating
margins.
Overall
group
margins
as
reported
averages
20
basis
points
to
15.3%.
After
restating
the
prior
year
downwards
by
60
basis
points
for
accounting
adjustments
and
FX,
we
delivered
a
40 basis
points
increase
across
three
main
areas as
I
would
describe
shortly.
2020
margins
have
been
restated
from
15.5%
to
14.9%
to
reflect
accounting
changes
and
latest
foreign
exchange
rates.
Accounting
guidance
was
issued
in
the
year
by
the
International
Financial
Reporting
Interpretations
Committee
clarifying
the
treatment
of
accounting
for
Software-as-a-Service.
Essentially,
it
is
ruled
that
any
configuration
cost
should
be
expensed
rather
than capitalized.
With
the
implementation
of
our
global
HR
management
system
and
dollar
cloud
based
software
in
2020 and
2021,
we
incurred
£7
million
of
configuration
cost
in
2020
and
£4
million
in 2021
which
historically
would
have
been
capitalized.
These
have
now
been
expensed
in
both
years
and
included
largely
within
our
allocated
costs
resulting
in
a
restatement
of
the
2020
results
with
a
30 basis
points
impact
on
margins.
Going
forward,
we
would
expect
the
impact
to
be
modest
as
our
system
transformation
activities
reduce,
thereby,
having
no
significant
impact
on
our
medium-term
targets.
Translational
FX
has
reduced
the
margins
by 30
basis
points,
simply
due
to
the
mix
of
profitability
relative
to
currency
movements
in
the
year.
And
of
course,
that
can
move
positively
or
negatively
as
we
move
forward.
Now
moving
on
to
the
three
drivers
of
underlying
margin
improvement
in
the
year.
Firstly,
as
expected
and
in
line
with
our
three-year
plan,
we
delivered
a
40 basis
points
underlying
improvement
in
margins
driven
by
ESCO
operating
leverage
and
operational
improvements
across
the
group,
including
those
examples
previously
described.
This
amounted
to
around 80
basis
points
with
a
40 basis
points
offset
for
our
increase
in
strategic
R&D
investment.
Secondly,
the
2
percentage
points
movements
in
Minerals
mix
towards
aftermarket
had
a
60 basis
points
favorable
impact.
And
thirdly,
the
net
impact
of
the
cyber
incident
and
residual
COVID
impact
was
a
negative 60
basis
points.
COVID
was
net
neutral
and
Minerals
at
returning
costs
were
offset
by
lower
under-recoveries.
In
ESCO,
COVID
was
a
slight
negative
as
costs
returned,
but
without
the
corresponding
opportunity
to
improve
recoveries,
which
as
we
said
last
year,
were
less
impacted
than
Minerals.
The
main
net
impact,
therefore,
related
to
cyber
and
was
mainly
driven
by
under-recoveries
in
the
Minerals
Division.
These
costs
are
expected
to
reverse
next
year
and
beyond.
Well,
there
have
been
a
number
of
moving
parts
this
year,
we've
been
pleased
with
the
underlying
improvements
and
challenging
circumstances.
It
was
great
to
see
the resilience
of
our
gross
margins
supported
by
robust
sales
price
increases.
With
the
impact
of
cyber
and
COVID
to reverse
and
Software-as-a-Service
to
be
less
significant
going
forward,
we
remain
on
track
to
deliver
a 17%
constant
currency
margin
by
2023.
As
we
said
last
year,
this
improvement
will
be
driven
by
operating
leverage,
continued
operational
efficiencies
and
a
focus
on
maintaining
our
gross
margins
through
this
inflationary
period
and
will
be
spread
broadly
evenly
over
the
next
two
years.
Specifically,
for
2022,
we
will
see
some
headwinds
from
mix
as
revenue
moves
towards
OE
and
from
our
increased
investment
in
R&D.
For
the
avoidance
of
doubt,
we
see
higher
OE
mix
as
a
positive
in
terms
of
value
creation
with
every
OE
seal
setting
the
foundation
for
a
long-term,
highly
profitable
aftermarket
annuity.
These
margin
headwinds
will
be
more
than
offset
by
operating
leverage
as
we
deliver
on
a
strong
order
book
from
within
existing
production
capacity,
and
we
see
a
reversal
of
the
cyber
overhead
recovery
impact
while
continuing
to
mitigate
the
effects
of
raw
material
and
freight
inflation.
H1
margins
are
expected
to
be
lower,
driven
by
a
heavier
weighting
of
OE
shipments
seen
in
the
opening
order
book.
Turning
to
cash
flow,
we've
seen
a
more
significant
impact
from
the
cyber
incident
and
our
growing
order
book.
The
working
capital
outflow
of
£103
million
is
reflective
of
an
increase
in
trade
receivables
following
the
back-end
loading
of
revenues
related
to
the
cyber
incident
and
a
buildup
of
inventories
in
both
Minerals
and
ESCO
to
support
a
record
closing
order
book.
As
a
result,
working
capital
as
a
percentage
of
sales
at
27.9%
was
above
normal
levels.
CapEx
was
lower
than
last
year,
and
our
plans
as
overall
spend
was
delayed
during
the
cyber
incident
and
final
permits
for
our
new
China
foundry
for
ESCO
takes
slightly
longer
than
planned.
CapEx
also
includes
the
benefit
from
the
proceeds
from
the
sale
of
a
property
in
China
as
part
of
our
efficiency
program.
We're
also starting
to
report
a
free
operating
cash
flow
conversion
measure,
and
this
will
become
a
KPI
for
the
group.
This
reflects
the
conversion
of
adjusted
operating
profit
to
operating
cash
flow
after
CapEx,
lease
payments,
dividends
from
JVs,
and
purchase
of
shares
for
employee
share
plans.
Over
the
course
of
2019
and
2020,
this
averaged
82%
and
clearly
this
year
at
63%
has
been
impacted
by
the
working
capital
outflow.
I
will talk
about
our
targets
for
operating
cash
flow
conversion
shortly.
Turning
to
the
next
slide,
free
cash
flow
of
£62
million
is
£70
million
lower
than
last
year,
mainly
due
to
the
operating
cash
flow
just
described.
Net
interest
is
£8
million
lower
than
the
prior
year,
reflecting
a
lower
net
debt,
while
cash
tax
is
£19
million
adverse
due
to
a
higher
tax
charge
and
some
payment
deferrals
from
last
year.
With
regards
to
net
debt,
we
saw
absolute
levels
reduced
by
£279
million.
This
follows
the
completion
of
the
sale
of
oil
and
gas,
partially
offset
by
the
acquisition
of
Motion
Metrics
in
November,
and
leaves
net
debt
to
EBITDA
at
1.9
times
on
a
lender
covenant
basis.
Returning
now
to
operating
cash
conversion
and
our
targets
going
forward.
As
you
can
see,
our
free
operating
cash
conversion
has
averaged
82%
over
the
course
of
2019
and
2020.
Over
the
medium
term,
we
target
this
to
improve
to
between
90%
and
100%.
This
will
be
driven
by
maintaining
working
capital
to
sales
between
20%
and
25%,
and
CapEx
and
lease
costs
being
at
around
1
times
depreciation.
Our
working
capital
will
be
optimized
as
we
continue
to
leverage
the
benefits
of our
global SAP platform
in
Minerals
to
allow
global
inventory
management
and
the
increasing
digitization
of
our
supply
chain
in
ESCO.
For
2022
and
2023,
we
expect
CapEx
and
leases
to
be
elevated
to
around
1.5
times
depreciation
amounting
to
an
incremental
£40
million
to £50
million
per
year.
This
is
to
support
the
build
of
the
new
ESCO
foundry
in
China,
the
final
SAP
rollout
in
Minerals,
as
well
as
other
digital
initiatives.
This
will
reduce
cash
conversion
to
80%
to
90%
over
the
next
two
years
before
settling
at
a
long-term
through
cycle
target
of
90%
to
100%.
Below
operating
cash
flow,
we
do not
expect
any
unusual
items
going
forward.
Exceptional
cash
costs
will
be
minimized,
legacy-defined
benefit
pension
deficit
repair
costs
are
expected
to
be
£10 million
to
£15
million
per
annum,
while
interest
on
tax
should
broadly
match
the
income
statement
charge.
These
operational
cash
flow
targets
provide
further
context
and
underpinning
detail
to
our
capital
allocation
policy
as
announced
last
year.
Very
briefly,
this
slide
sets
out
some
financial
guidance
for
this
year.
I
would
just
remind
you
from
a
cash
perspective
that
we
still
have £12
million
of
the
initial
Motion
Metrics
consideration
and
some
integration
costs
appear
in
2022.
And
from
an
income
statement
and
cash
perspective,
we
will
see
around
a
£6
million
saving
and
interest
this
year.
In
summary,
we
minimized
the
cyber
impact
on
profit
to
the
lower
end
of our
previous
guidance
while
cash
conversion
was
impacted
by
a higher
than
normal
level
of
working
capital.
Even
with
the
cyber
challenges,
net
debt
to
EBITDA
of
1.9
times
shows
our
financial
strength.
We
are
managing
through
the
inflationary
environment
with
scale
as
gross
margins
have
been
maintained
across
both
divisions.
Order
momentum
is
strong
and
we
enter
2022
with
a
record
order
book.
Execution
of
that
order
book
and
associated
operating
leverage
together
with
further
ongoing
efficiency
benefits
means
we
remain
confident
in
our
medium-term
growth,
margin,
and
cash
targets.
Thank
you,
and
I
would
now
hand
back
to
Jon.
Thank
you,
John.
In
this
next
section,
I'll
update
you
on
the
strategic
progress
we're
making
towards
our
medium-term
goals
and
share
why
we
are
so
excited
and
confident
about
the
future.
First,
let
me
remind
you
of
where
we
play,
what
we
do,
and
why
customers
choose
to
work
with
us.
Weir
has
a
unique
position
in
the
mining
value
chain. No
other business
provides the
same range
of
premium solutions
from
the
pit
to
the
processing
plant.
We
have
leading
market
positions
and
premium
brands
from
extraction,
through
comminution,
to
the
mill
circuit
and
tailings
management.
We're
operating
every
day
at
the
very
heart
of
the
mining
processes.
Our
highly
engineered
technology
is
mission
critical
to
our
customers
who
rely
on
our
solutions
to
avoid
downtime,
downtime
that
can
easily
cost
$10 million
a
day.
We're
very
focused
on
where
we
operate,
concentrating
on
high
abrasion
applications
which
generate
strong
aftermarket
demand,
and
we
support
that
demand
through
our
extensive
service
network.
It's
a
highly
resilient,
razor-razorblade
business
model.
Once
we
sell
the
original
equipment,
we
have
the
opportunity
to
provide
spares
and
service
in
the
aftermarket.
And
for
every
original
equipment
sale
we
make,
we'll,
in
average,
achieve
around
30%
of
the
original
value
in
spare
parts
per
year.
And
that
figure
is
even
higher
for
our
large
warm
and
slurry
pumps.
So
we
have
a
reliable,
sustained
revenue
stream
throughout
the
mining
cycle.
Increasingly,
we
are
extending
digital
connectivity
across
our
portfolio
with
our
proprietary
Synertrex
platform
and
the
recent
addition
of
Motion
Metrics
rugged
camera
and
AI
visualization
technology
is
adding
to
our
leadership
in
mechanical
engineering
and
materials
science.
With
such
a
broad
portfolio
across
the
mine
and
a
trusted
reputation,
customers
look
to
Weir
as
a
key
enabler
of
innovation
and
performance
improvement
in
the
industry.
Strategically,
we're
working
even
more
closely
in
partnership
with
customers
to
develop
new
technologies
that
will
help
make
the
mines
of
the
future
smarter,
more
efficient,
and
sustainable.
Our
deliberate
repositioning
to
focus
on
mining
technology
is
enabling
us
to
take
advantage
of
the
multi-decade
growth
opportunities
that
exist
in
partnership
with
the
industry
we
serve.
Demand
for
metals
will
continue
to
increase
with
demographic
drivers,
but
these
factors
have
now
been
overtaken
by
expected
demand
from
the
clean
energy
transition,
driven
by
ever-increasing
global
action
against
climate
change.
As
the
rise
of
electric
vehicles
and
transition
to
renewable
energy
generation
gathers
pace,
this
is
translating
into
significant
increases
in
demand
for
metals
like
copper,
nickel,
and
lithium.
And
at
the
same
time,
there's
a
technology
shift
underway
in
mining
as
the
industry
grapples
with
the
ongoing
challenge
of
ore
grade
declines,
meaning
more
material
needs
to
be
mined
and
processed,
while
keeping
safety
as
a
top
priority
and
also
while
responding
to
pressure
to
decarbonize
and
reduce
energy
and
water
intensity.
Without
a
reduced
environmental
impact,
our
customers
will
not
have
the
social
license
to
operate.
So
the
challenge
is
twofold.
More
essential
resources
are
needed
to
meet
the
levels
of
electrification
and
renewable
power
generation
required
to
get
to
net
zero,
but
the
way
those
resources
are
produced
must
significantly
change.
And
that's why
mining
needs
to
become
smarter,
more
efficient
and
sustainable,
and
this
presents
Weir
with
tremendous
opportunities
as
we
leverage
our
leading
market
positions
and
global
footprint,
all
of
which
plays
right
to
the
core
of
our
organization's
purpose.
Our
strategic
ambitions
ensure
that
we
focus
on
the
areas
that
will
deliver
against
those
opportunities,
accelerating
sustainable
profitable
growth
in
the
future
for
the
benefit
of
all
our
stakeholders.
They
are
aligned
to
our
We
are
Weir
framework
and
its four
pillars
of
people,
customers,
technology,
and
performance.
First
and
foremost,
we
want
to
be
a
zero
harm
workplace.
We're
determined
to
get
there,
building
on
the
significant
progress
we've
made
in
recent
years,
and
to
help
our
customers
with
their
journey,
too.
We
also
know
the
benefits
of
an
inclusive,
diverse,
and
equitable
workplace
where
people
can
be
themselves
and
feel
like
they
belong.
And
this
helps
reinforce
a
vibrant
and
purpose-driven
culture.
At
the
same
time,
we
continue
to
invest
in
our
people
at
all
levels
across
Weir,
giving
them
the
opportunity
to
do
the
best
work
of
their
lives
and
creating
the
talent
and
capabilities
we
need
to
be
successful
in
the
future.
Turning
to
customers,
our
goal
is
to
grow
ahead
of
our
markets
by
getting
closer
to
customers,
working
in
partnership
to
solve
their
biggest
challenges.
And
more
broadly,
we
will
raise
our
voice
to
show
leadership
in
the
mining
industries'
transformation
to
net
zero.
In
technology,
we
continue
to
invest
to
expand
our
development
pipeline,
marrying
our
engineering
excellence
with
digital
capability
to
create
new,
smarter
ways
of
doing
business
that
are
based
on
data-driven
decisions
and
insights.
And
as
we
grow
profitably,
we
will
continuously
work
to
be
leaner,
cleaner
and
more
efficient,
which
will
support
expanded
margins
and
strong
cash
conversion,
demonstrating
the
quality
inherent
in
our
business.
In
2021,
we
made
good
progress
towards
realizing
these
ambitions.
And
over
the
next
few
slides,
I
want
to
give
more
color
on
the
level
of
our
ambition.
Starting
with
people.
Safety
remains
our
number
one
priority.
And
throughout
Weir,
we
do
everything
we
can
to
ensure
we
all
have
a
safe
start,
safe
finish,
and
safe
journey
home
every
day.
For
the
group
as
a
whole,
in
2021,
our
Total
Incident
Rate
of
0.45
is
broadly
in
line
with
the
prior
year,
which
I
believe
is
very
creditable
given
the
ongoing
challenges
around
COVID
and
other
disruptions.
ESCO
continue
to
significantly
improve
its
safety
performance
and
this
TIR is
now
over
50%
lower
than
when
we
acquired
the
business
in
2018,
a
terrific
achievement.
Overall,
our
TIR continues
to
place us
among
the
leaders
in
our
sector.
Our
absolute
goal
remains
zero
harm.
And
in
2022,
we'll
focus
on
further
embedding
the
right
safety
behaviors
in
order
to
drive
a
breakthrough
in
performance.
2021
has
thrown
a
lot
at
the
organization,
but
we
continue
to
listen
to
our
employees.
I
was
delighted
to
see
participation
reach
90%
in
our
2021
employee
survey
and
our
Employee
Net
Promoter
Score
increased
again,
putting
us
in
the
top
quartile
against
industrial
benchmarks.
Meanwhile,
the
completed
deployment
of
the
Workday
HR
system
has
been
a
major
step
forward
in
streamlining
and
enhancing
our
people
processes
and
gives
us
a
great
platform
from
which
to
drive
further
progress
on
talent
in
2022.
We
saw
our
purpose
come
alive
in
2021,
most
notably
in
celebration
of
our
150th
anniversary,
when
employees
on
every
corner
of
the
globe
took
part
in
our
Day
of
Purpose
program
to
give
something
back
to
their
families
and
communities.
People
gave
blood,
spent
time
in
schools,
overhauled
community
gardens,
cycled
in
major
charities,
and
much,
much
more.
We
continue
to
support
our
people
and
their
families
with
company-organized
vaccine
clinics
such
as
the
one
at
our
site
in
India
where
over
700
individuals
took
part.
And
it's been
great
to
see
the
expansion
of
our
global
affinity
groups
as
more
and more
colleagues
engaged
in
our
ID&E
activities.
This
caring
and
purposeful
culture
is
an
enormous
asset
to
Weir
and
one
that
requires
continual
investment.
It
is
the
absolute
bedrock
of
our
ongoing
success
as
an
organization
and
will
underpin
our
ability
to
deliver
on
our
strategy
in
the
future.
Turning
to
growth,
we
continue
to
expect
our
markets,
principally
driven
by oil
production,
to
grow
at
around
3%
per
annum
in
line
with
long-term
averages.
In
contrast,
our
goal
is
to
grow
faster
than
our
markets
and
to
deliver
mid-
to
high-single-digit
growth
through
the
cycle.
This
will
be
achieved
through
our
strategic
growth
initiatives
where
we
will
build
further
on
our
existing
momentum.
For
Minerals,
the
largest
growth
driver
will
be
our
further
expansion
in
comminution,
where
we
are
rapidly
growing
our
installed
base
of
HPGRs,
our
market-leading
technology
that
supports
increased
production
while
reducing
energy
consumption
by
around
40%
compared
to
alternatives.
Over
the
last
year,
we
saw
comminution
orders
increase
by
60%
as
miners
recognize
the
benefits
of
this
more
efficient
and
sustainable
solution.
In
2021,
we
won
around
80%
of
the
hard
rock
expansion
projects,
which
specify
high volume,
large
format
HPGRs.
And
with
currently
around
£150
million
of
sales
per
annum,
comminution
has
the
potential
to
triple
on
a
sustainable
basis
over
the
next
five
years.
The
focus
for
geographic
expansion
in
Minerals
is
Central
America,
Eastern
Europe,
Central
Africa,
and
Central
and
Southeast
Asia,
where
we
are
rapidly
expanding
our
service
footprint
to
support
new
mines
and
expansion
projects.
We
have a deeply
embedded
philosophy of
having
boots
on
the
ground
with our
customers,
and
this
remains
core
to
our
offer.
During
the
last
year,
we've
opened
seven
new
service
centers
across
these
regions
including
two
joint
mineral
ESCO
centers
as
we
leverage
our
complete
mining
technology
portfolio
into
new
markets.
We
will
continue
to
grow
market
share
of
our
core
products,
particularly
in
territories
where
we
have
been
underrepresented
or
lost some
share
in
the
past,
and
we'll
introduce
new
products,
such
as
hydro-hoisting,
drawing
on
our
traditional
strengths
in
material
science,
mechanical
engineering,
and
hydraulic
technology
to
make
our
customers'
operations
smarter,
more
efficient,
and
sustainable.
Customer
intimacy
is
a
big
differentiator
for
Weir.
Mining
is
a
24/7
need-it-now
industry
and
we
aim
to
have
engineers
on
the
ground
no
more
than
200 kilometers
from
any
customer
so
that we
can
provide
them
with
the
high-quality
products
and
service
they
need
to
keep
production
going.
Our
approach
means
we're
able
to
develop
and
maintain
long-standing
relationships
built
on
trust,
and
with
that
trust,
and
our
unique
viewpoint
at
the
heart
of
the
core
processes
across
the
mine
will
develop
integrated
solutions.
This
activity
ranges
from
basic
problem
solving
and
debottlenecking
to
expand
production
and
productivity
right
through
to
process
transformation
where
we've
been
able
to
combine
our
technical
capabilities
to
offer
novel
approaches
to
customer
challenges.
For
example,
our
customer
at
a
copper
mine
in
the
north
of
Chile
needed
to
increase
plant
capacity
and
equipment
availability.
Our
engineering
team
designed
a
new
solution
comprising
a
larger
capacity,
Synertrex-enabled
Cavex
hydrocyclone
cluster
together
with
a
large Warman
cyclone
feed
pump.
Using
3D
scanning
to
design
the
new
layout
within
the
existing
footprint,
minimize
downtime
for
the
customer
and
the
new
integrated
solution
increased
capacity
by
over 20%
and
service
life
by
more
than
65%.
It's
through
examples
such
as
this
that
we
continue
to
grow
our
integrated
solutions.
Orders
in
2021
increased
by
32%
to
£210
million,
representing
some
10%
of
our
total
orders
in
the
year.
In
ESCO,
we
will
continue
to
leverage
the
strong
value
propositions
of
our
core
product
range
to
grow
our
share,
such
as
in
the
case
of
our
Nemisys
GET
system,
which
is
now
established
as
the
market
leader
across
all
mining
systems,
delivering
over
200
net
conversions
in
2021,
and
underpinning
our
leading
market
share
in
mining
GET.
Beyond
the
core
GET
product
range,
we're
extending
the
range
of
parts
we
offer
on
large
mining
machines
to
other
Weir
areas
and
having
more
capital
equipment
such
as
truck trays
to
our
offering.
We're
extending
a
number
of
markets
where
we
offer
bespoke
engineered
bucket
solutions
with
a
target
that
we
become
the
global
number
one
in
aftermarket
mining
machine
attachments.
Geographic
expansion
will
follow
in
similar
regions
to
Minerals
for
mining.
But
in
ESCO,
additionally,
we're
expanding
our
infrastructure
business
for
premium
applications
beyond
our
core
markets
of
North
America
and
Europe
to
create
a
global
business.
And
similar
to
Minerals,
ESCO
has
an
opportunity
to
offer
its
own
version
of
integrated
solutions
in
the
mine,
such
as
load/haul
optimization
solutions
that
enable
our
customers
to
significantly
increase
productivity
and
reduce
energy
consumption.
For
example,
when
a
South
African-based
hard
rock
mining
customer
approached
us
to
bid
for
a
replacement
rope
shovel
bucket,
our
engineers
saw
an
opportunity
for
a
more
innovative
and
impactful
solution.
They
proposed
an
alternative
option
to
the
customer,
which
through
our
superior
engineering
design,
lightweight
construction,
and
development
of
a
custom
lip
system
would
enable
them
to
use
a
larger
shovel
bucket
and,
hence,
transfer
more
material
onto
their
haul
trucks
each
time
the
bucket
was
filled.
To
get
a
sense
of how
much
these
units
move,
each
bucket
scoop
is
over
100
tonnes
and
the
shovel
will
excavate
the
equivalent
of
an
Olympic
swimming
pool
in
less
than
an
hour.
The
customer
accepted
the
proposal
and
we've
now
installed
our
latest
Nemisys
N3
shovel
bucket
and lip
system
at
the
mine,
and the
results
have
been
impressive.
The
average
payload
realized
in
each
bucket
is
exceeding
designed
outcomes.
Whole
trucks
are
now
filled
consistently
in
three
passes,
not
four,
while
realizing
higher
average
target
payloads.
We're
doing
more
with
less.
Each
scoop
saved
reduces
truck
idle
time
under
the
shovel,
directly
reducing
truck
fuel
burn
and,
therefore,
CO2
emissions
per
unit
of
mine
production.
Additionally,
a
25%
increase
in
shovel
capacity
allows
the
client
to
maximize
their
lowest
cost
and
most
efficient
loading
unit
while
deprioritizing
more
expensive
and
less
efficient
loading
units,
an
efficient
and
more
productive
solution
all
round.
Superior
technology
is
a
hallmark
at Weir
and
we're
investing
more
in
R&D
to
support
future
growth.
As
I've
already
said,
a
technology-led
transition
is
gathering
pace
as
the
global
mining
industry
looks
to
achieve
net
zero
and
fulfill
its
ESG
promises
while
producing
more
of
the
essential
natural
resources
needed
for
a
sustainable
future.
This
will
see
accelerated
investment
in
the
development
of
new
breakthrough
technologies,
which,
of
course,
will
provide
tremendous
future
growth
opportunities
for
us.
Our
goal
is
to
play
a
leading
role
in
developing
and
deploying
the
technologies
that
will
support
our customers
on
this
journey.
Our
technology
strategy
is
underpinned
by
our
world-class
core
expertise
in
material
science,
mechanical
engineering,
and
hydraulics
now
augmented
with
digital
capability.
We're
directing
our
technology
towards
smart,
efficient,
sustainable
solutions,
and
allocating
increased
levels
of
R&D
investment
across
three
key
arenas
to
grow
our
technology
pipeline.
Firstly,
we're
investing
to
maintain
the
competitive
advantages
of
our
existing
products
through
advances
in
material
science,
and
the
mechanical
and
hydraulic
properties
of
our
equipment.
For
example,
we
recently
launched
the
new
super
resilient
mill
lining
rubber
compound,
which
is
tear
and
heat-resistant
which
will
support
our
expansion
in
that
market.
Secondly,
we're
investing
more
in
developing
new
sustainable
solutions
to
help
customers
reduce
their
emissions
and
water
consumption,
building
on
the
success
we've
had
with
HPGRs in
comminution,
where
we're
now
the
clear
market
leader.
We'll
also
continue
to
focus
on
integrated
solutions
where
we
can
combine
our
existing
technologies
or
with
those
of
strategic
partners
to
solve
difficult
problems
for
our
customers.
And
thirdly,
we're
increasing
our
investment
in
scouting
and
technology
foresighting
to
identify
new
opportunities
that
have
the
potential
to
deliver
more
from
less
in
mining
processes,
such
as
ore
fragmentation
and
characterization,
coarse
particle
flotation,
and
additive
manufacturing.
We
believe
the
transformation
to
a
net zero
future
can
only
be
achieved
through
partnership
and
system
solutions.
So,
we'll
continue
to
develop
the
right
strategic
alliances
and
technology
partners
to
complement
our
expertise
such
as
those
announced
with
Henkel
and
Andritz in
2021.
Turning
to
the
digital
arena,
of
course,
it's
a
given
as
for
any
industrial
company
that
everything
we
do
today
has
to
be
digitized
to
drive
efficiency,
automation,
and
deliver
an
overall
enhanced
customer
experience.
ESCO,
for
example,
is
digitizing
its
supply
chain
to
deliver
an
Amazon-like
experience
for
customers.
And
in
Minerals,
our
Field
Service
Management
tool
is
shifting
the
end-to-end
management
of
our
installed
base
from
analog
to
digital,
bringing
real-time
performance
data
and
technical
product
information
into
the
hands
of
service
technicians
in
the
field.
But
beyond
this,
we're
seeking
out
new
ways
to
create
data
and
insights
for
our
customers
across
our
touch
points
in
the
mine
and
process
plant.
Our
capability
in
this
regard
gained
a
significant
boost
late
last
year
when
we
acquired
Motion
Metrics,
a
market
leading
developer
of
innovative
AI
and
3D
Machine
Vision
Technology.
The
Motion
Metrics
technology
is
already
used
in
several
mines
around
the
world
and
comprises
smart,
rugged
cameras
which
were
initially
developed
to
provide
tooth loss
and
wear
rate
detection
to
shovel
and
loader
operators,
whereby
data
from
the
cameras
is
processed
by
artificial
intelligence
to
provide
real-time
feedback
that
enables
immediate
identification
of
potential
issues
that
could
compromise
safety
or
cause
unplanned
downtime
at
the
mine.
The
market
demand
for
this
technology
has
increased
rapidly
and
will
be
complemented
by
our
sensor-based
technology,
with
growth
significantly
accelerated
through
our
global
distribution
networks.
But
we
believe
there's
a
much
broader
opportunity
to
use
3D
visual
technology
and
AI
to
provide
data
on
the
performance
of
equipment,
faults,
payloads
and
rock
fragmentation
through
comminution
and
across
the
mining
process,
offering
the
possibility
of
end-to-end
process
optimization
as
part
of
our
wider
digital
strategy.
Motion
Metrics
will
report
through
the
ESCO
division,
but
recognizing
this
broader
opportunity
will
serve
as
Weir's
global
center
of
excellence
for
AI
and
Machine
Vision
Technology,
supporting
the
increased
digitalization
of
our
broader
product portfolio
and
with
a
direct
line
into
me.
We
have
already
secured
early
orders
as
we
leverage
our
global
sales
network
and
ESCO's
large
installed
base
to
expand
adoption
and
drive
significant
revenue
growth.
I
am
very
excited
about
the
potential
of
this
acquisition.
As
well
as
supporting
our
customers
with
more
sustainable
and
digitized
solutions,
we're
also
making
progress
on our
own
path
to
net zero
aiming
to
deliver
a
30%
reduction
in
Scope
1
and
2
emissions
relative
to
revenue
by
2024
and
SBTi-aligned
absolute
reduction
by
2030.
We've
made
further
progress
in
2021,
reaching
a
cumulative
15%
reduction
in
CO2
emissions
versus
our
2019
baseline,
focusing
on
targeted
actions
to
reduce
our
overall
energy
intensity
and
increase
the
proportion
of
energy
from
renewables.
For
example,
our
Chinese
foundry
was
named
a
green
foundry
by
a
prestigious
government-certified
scheme
in
2021.
And
in
Chile,
a
power
purchase
agreement
in
our
operations
has
reduced
our
local
carbon
footprint
from
electricity
consumption
by
95%
per
annum.
We're
also pleased
to
retain
our
A-
score
with
CDP,
despite
the
bar
being
raised
once
again.
And
looking
beyond
our
own
operations,
we've
now
completed
our
assessment
of
Scope
3
emissions,
which
confirms
that,
by
far,
the
biggest
overall
impact
we
can
have
as
a
business
is
by
reducing
the
energy
consumption
of
our
products
in
use
on
our customers'
sites.
That's
why
our
business
strategy
is
focused
on
helping
our
customers
meet
their
net-zero
ambitions
both
in
terms
of
the
products
we
have
in
the
field
and
those
we're
developing.
This
includes
Scope
4
offerings
where,
for
example,
emissions
are
avoided
due
to
increased
wear
life
or
energy
efficiency,
which
is
our
sweet
spot.
We
remain
on
track
with
the
strategy
we
set
out
in
2020,
and
accordingly,
we've
now
pledged
our
commitment
to
the
Science Based
Targets
initiative,
which
means
we
will
set
strengthened
emissions
reduction
targets
aligned
with
the
Paris
Agreement
on
climate
change
across
Scopes
1, 2,
and
3.
We
expect
to
publish
these
more
ambitious,
externally
validated
emission
targets
later
this
year.
And
of
course,
we're
providing
both
our
first
full
TCFD
disclosures
and
our
Scope
3
evaluation
in
our
forthcoming
annual
report.
Putting
that
all
together,
I
want
to
reaffirm
our
confidence
in
delivering
the
following
medium-term
goals.
Firstly,
growing
revenue
strongly
ahead
of
our
markets
through
the
strategic
growth
initiatives
that
I
outlined
in
detail
earlier.
Second,
expanding
group
operating
margins
to
17%
in
2023
through
operational
leverage,
the
elimination
of
recent
one-off
effects,
and
driving
back-office
efficiency,
as
John
outlined
earlier.
Third,
achieving
90%
to
100%
operating
cash
conversion
in
2024
and
beyond.
And
finally,
not
only
fulfilling
our
existing
sustainability-linked
targets
but
going
on
to
set
more
ambitious,
externally
validated
ones.
And
we'll
deliver
all
of
this
while
investing
more
in
our
people
and
technology
to
support
our
strategic
ambition.
Let
me
close
with
a
few
words
on
what we're
seeing
in
the
market
and
the
outlook
for
2022.
Current
market
conditions
are
extremely
favorable.
Our
customers
are
focused
on
maximizing
production
to
benefit
from
record
commodity
prices,
supporting
underlying
spares
and
service
demand.
We
have
seen
really
good
activity
in
smaller
brownfield
projects
where
paybacks
are
quick
and
don't
disrupt
ongoing
production.
For
larger
brownfield
and
greenfield
opportunities,
we
have
a
strong
pipeline,
but
conversion
remains
slow
although
customers
are
focusing
more
on
new
supply,
given
expectations
for
future
demand
and
expected
shortages
for
the
key
future-facing
metals.
So,
on to
outlook.
2022
has
started
well,
and
the
impact
of
last
year's
cybersecurity
incident
is
behind
us.
We
have
a
record order
book,
and
our
markets
are
buoyant,
which
is
expected
to
remain
the
case.
We
expect
to
continue
to
have
to
deal
with
ongoing
disruption
from
COVID-19
and
inflationary
and
logistics
challenges
in
the
supply
chain
while
remaining
vigilant
of
a
heightened
geopolitical
risk.
Specifically,
the
rapid
escalation
of
events
in
Ukraine
and
Russia
has
created
significant
uncertainty
about
our
operations
and
trading
in
those
countries.
Our
priority
is
the
safety
of
our
impacted
colleagues,
and
we
continue
to
provide
them
with
all
the
support
we
can.
Our
overall
exposure
is
small
with
combined
Ukraine
and
Russia
net
assets
of
around
2%
of
the
group's
total,
and
combined
revenue
and
profit
being
less
than
5%.
We
are
actively
assessing
the
situation
closely
and
considering
options
as
to
how
best
look
after
our
people
and
protect
our
assets,
and
we'll
update
further
as
required.
Subject
to
the
ongoing
geopolitical
uncertainty,
in
2022,
we
expect
to
deliver
strong
growth
in
constant
currency
revenue
and
profit
consistent
with
our
medium-term
objectives.
Before
we
move
to
questions,
let
me
quickly
summarize
the
key
messages
from
this
presentation.
Today,
Weir
is
a
premium,
highly
resilient
mining
technology
business,
and
we
have
a
major
opportunity
to
make
mining
smarter,
more
efficient,
and
sustainable.
Long-term
trends
from
technology-led
transition
to
net-zero
mining
are in
our
favor.
And
we
have
a
clear
strategy
to
deliver
profitable
growth
ahead
of
our
markets
while
delivering
sustainable
margin
improvement.
That's
why
I
remain
excited
by
the
prospects
for
our
business
in
2022
and
beyond.
Thank
you.
John
and
I,
together
with
Ricardo
and
Andrew,
will
be
pleased
to
take
any
questions
that
you
have.
Thank
you.
[Operator Instructions]
Our
first
question
comes
from
the
line
of
Max
Yates
from
Credit
Suisse.
Max,
please
go
ahead.
Thank
you.
Good
morning,
everyone.
Just
my
first
question
would
be
on
pricing
in
the
aftermarket.
I
think
we've
previously
been
used
to
mine
production
growing
at
around
3%,
maybe
the
overall
business
growing
at
5%,
but
I
guess
this
is
largely
volume
related.
So,
I
just
wanted
to
understand
sort of
how
much
pricing
would
be
likely
to
contribute
to
order
growth
this
year
for
the
aftermarket
business.
Good
morning, Max.
How
are
you?
Yeah.
So,
I
think
on
pricing,
as
you've
seen
from
the
release,
we
did
a
great
job
in
2021.
I
think
getting
ahead
of
the
curve,
getting
the
price
increases
out
so
that
we
protected
our
gross
margins.
We
expect
to
continue
to
do
the
same
in
2022.
We
have
already
issued
new
price
increases
beginning
of
this
year
across
both
businesses. And
as
I
look
at
2022,
the
realization
I
would
expect
from
those
price
increases
is
probably
approaching
mid-single-digit
contribution
to
our
growth
as
the
price
increases
kick
in
through
the
course
of
the
year.
Okay.
That's okay.
Just
the
follow-up
question
would
be
around
– I
think
there
was
a
comment
where
you
started
talking
about
the
Lean
manufacturing
and
benchmarking
all
of
your
facilities
to
certain
metrics. And
I
just
wanted
to
understand sort
of
how
long –
how
far
along
we
are
in
that
process.
Is
that
something
that's
been
going
on
for
a
couple
of
years
now,
or
you've
just
started?
And
do
you
have
internally
kind
of as
a
bridge
to
get
to
those sort of
2023
targets,
any
cost
savings,
absolute
numbers
of
cost
savings
that
these
actions
may
yield
over
the
next
couple
of
years?
Yeah.
Well,
let
me
make
an
overarching
comment.
And
then
maybe
I'll
ask
Ricardo
and
Andrew
to
talk
about
what
they're
doing
on
manufacturing
efficiencies
in
each
of
the
two
businesses.
I
would
say
that
I
think Lean
is
something
that
we've
refocused
on
over
the
course
of
the
last
two
years,
recognizing
as
we
emerged
from
the
portfolio
transformation
as
a
mining
technology
pure
play,
that
the
operational
improvements
and
efficiencies,
maximizing
our
capacity
utilization
is
going
to
be
an
important
factor
in
terms
of
driving
the
operating
leverage
that
will
extend
our
margins
over
the
course
of
the
next
two
or
three
years.
So,
it
has
been
an
area
that
we
have
reprioritized
that
we're
making
really
good
progress
on.
But
maybe
Andrew
and
Ricardo
could
give
a
little
bit
of
color on
each
division.
Yeah. Thank
you,
Jon.
Yes,
Max, Lean is
a
never-ending
journey.
You're
never
finished
with
that.
There's
always
ways
to
improve.
We
have
absolutely
in our
shops
huge
amount
of
[ph]
casing
walls (00:52:54)
so
we
can
get
from
the
base
of
our
employees
exactly
what
are
the
ideas
to
improve production.
But
structurally,
the
whole
division –
80%
division
now
is
on
SAP,
so
we
have
a
really
good
tool
we
can
really
see
live
what
is
going
on
[ph]
is
the (00:53:11)
inventory,
manufacturing,
production.
We're
rolling out
new
system
like 42Q where
we
can
see
our
job
efficiency,
and
also,
structurally,
we
just
expanded
our
shop
in
Australia,
our
foundry
in
Artarmon
after
we
expand
our
shop
in
Santiago and
Todmorden,
and
now
we're
getting
the
efficiency
of
15%,
16%.
Also,
we
shut
down
our
shop
in
China;
opened a complete
new
modern
facility.
So,
efficiency
is
absolutely
in
our
mindset.
In
the
supply
chain,
we
also
expanded
our
supply
chain
base
in
China,
Mexico,
and
the
Black
Sea,
so
we're
now
getting
access
to
new
sources
of
suppliers
that
are
out
of
the
traditional
ones.
Of
course,
the
supply
chain
is
always
the
case,
but
Lean,
as
I
said
before,
it's
a journey
that never
ends,
and
we
have
a
good
firm
to
go
for
the
base
to
ideas
to
make
things
quicker,
cheaper,
and
faster.
Andrew?
Yeah.
I
think
for
ESCO,
Max,
we
really
reinvigorated
this
over
the
last
12, 18
months.
We
do
feel
there's a
lot
more
to
come
over
the
next
three,
four
years.
And it's
really
about,
as
Ricardo
says,
lean
continuous
improvement
journey.
It's
one
big
focus
area
for
us,
also
process
control.
And
around
supporting
that,
we
actually
inputted
last
year
a
new
system
OSI
PI,
which
lets
us
digitally
see
data
far
quicker,
put
actually
some
of
the
visualization
in the
hands
of
the
operator
so
we
can
react
quickly
when
we
see
process
control
moving
away
from
optimal
performance.
So,
for
example,
that
drives
directly
to
lower
scrap,
less
rework,
and
it gives
us
the
benefit
of
also
efficiencies,
but
also
effectively
more
capacity
in
the
system.
We
also
will
see
the
benefits
of
investment
we've made
over
the
last
couple
of
years
and
ongoing,
which
improves
the
quality
of
the
assets
and
makes
us
deliver
better.
And
then,
lastly,
and
as
Ricardo
says,
supply
chain
is
always
an
ongoing
area
where
we're
looking
to
best
co-source
where
we
can
and
optimize
our
cost
across
the
supply
chain,
including
looking at
logistics routes,
for
example,
given
the
stress
we
see
in
that
right
now.
Okay,
very
helpful.
Thanks.
Maybe
just
one
very
quick
final
one
on
ESCO.
I
think
we're
used
to
an
ESCO,
seeing
the
business
have a
sort
of
seasonal
Q1
uptick
in
line
with
activity.
We
obviously
exited
this
year
at
a
pretty
healthy
order
level.
So
I
just
wanted
to
understand,
as
the
year
has
started,
have
you
seen
the
normal
sort
of
Q1
versus
Q4
seasonal
uptick
in
ESCO
or
were
you
already
running
at
very
high
levels
in
Q4?
Andrew?
Yeah.
Yeah.
I
think
so
in
terms
of
Q1,
we're
going
into
the
year
kind
of
underlying
similar
levels,
continued
strong
performance
really.
And
really,
the
driver
of
that
uptick
is
typically
the
start
to the
year,
seeing
some
customers
placing
orders
for
the
year
and
the construction
market
tends
to
be
quite
seasonal and
you
see
more
orders
in
Q1,
which
are
delivered
over
the
course of
the
year.
So
we
are
seeing
a
degree
of
those
patterns
continuing,
albeit
the
construction
industry,
obviously,
[ph]
left
the
year
(00:56:10) a
very
high
rate
and
we don't
really
see
the
tail
off
in
Q4
in
construction
orders
that
you
would
normally
see.
And
then,
if
you
remember,
Max,
last
year
was
sort of
characterized
by
infrastructure
spending
and
orders
ramping
up
really,
really
quickly
at
the
beginning
of
the
year,
and
that
continued
at
a
high
level
throughout
the
year.
The
mining
GET
lagged
that
as
the
large
mining
machine
sort
of
came
back
on
line
over
the
course
of
the
year.
So
we
saw
the
growth
in
mining
GET
catch
up
over
the
course
of
the
year
and
that
part
of
the
business exits
with
momentum,
whereas
the
infrastructure
piece
is
probably
sort
of
at
high
levels
of
activity
but
not going
to
leg
up
again
from
where
it
is
at the
moment.
Very
clear.
Thanks,
everyone.
Our
next question
comes
from
the
line
of
Andrew
Douglas
from
Jefferies.
Andrew, please
go
ahead.
Good
morning,
guys.
I've
got
four
questions,
[ph]
two
I
hope
will be
nice
and
quick,
two
hopefully
a
bit
more
big
picture-y (00:57:05).
Could
we
just
talk about
Russia
and
your
supply
chains?
I
just want
to
make
sure
that
there's
nothing
that
we
need
to
worry
about
[ph]
that. All
we're
hearing
(00:57:15)
is one
or
two
automotive
companies
now
suggest
that
they're
struggling
because
they
would
get
[ph]
their parents
under
Russia,
which
they
can't
get
hold
of (00:57:22).
So,
appreciate
it's
a
small
profit
number
but
just want
to
make
sure
there's
nothing
untoward
there.
I'm
slightly
surprised
by
the
fourth
quarter
order
intake
in
original
equipment
in
Minerals,
plus
9%.
It
was
on
a
weak
comp,
minus
18%,
which
might
be under
strong comp the
prior
year
before
that,
but
just
thought
9% might
have
been
a
bit
better.
So, I
just
want
to
make sure that
I'm not
missing
anything
or
there's
nothing
untoward
there.
And
then
two
slightly
bigger picture
questions,
can
you
just
talk
about
how
you
think
you're
positioned
relative
to
your
peers
from
a
mining
technology
perspective?
I
appreciate
your
recent
acquisition
gives you
another
leg up,
but
I've got
no
idea
how
you
compare
to
your
peer
groups.
So,
it
would
be
just
helpful
to
understand
that
a
bit
more.
And
then
this
is
really
an
unfair
question
but
I'm
going to
ask
it anyway. Your
17%
margin
target,
you're
nice
and
robust
in
terms
of
[indiscernible]
(00:58:09) in
2023.
Is there
any
structural
reason
why
17%
margins for
Weir
as
a
group
can't
be
higher?
Okay.
Well,
let
me
start
with
the
third
and
fourth
questions,
Andy,
the
bigger
picture
ones.
And
I'll ask
Ricardo
to
talk
because
he's
got
by
far
the
largest
business
in
Russia,
just
talk
about
how
that
business
works
and
were
there
any
supply
chain
concerns,
and
the
fourth
quarter
orders
question.
So,
look,
I
think
it's
difficult for
me
to
talk
about our
peers
on
the
technology
positioning,
but
I
think
when
I
look
at
where
we
are
unique
in
the
positions
with
leading
brands
that
we
have
from
the
pit
right
through
to
the
process
plant
right
through to
tailings,
it
gives
us
unique
touch
points
and
boots
on
the
ground
as
to
what's
going
on.
As
we
said
in
the
prepared
remarks,
customers
are
hugely
focused
at
the
moment
on
trying
to maximize
production
out
of
their
existing
facilities
and
we're
positioned
to
help
them
both
tactically
with
that,
but
also
by
having
bigger
picture
conversations
about
how
all
of
that
run-of-mine
process
is
working,
listening
to
voice
of
customer,
and
then
feeding
that
into
our
technology
and
R&D
pipeline
so
that
we
can
bring
technology
to
bear.
And
that's
our
traditional
technology,
materials
science,
mechanical
skills,
hydraulics
now
supplemented
by
the
digital
touch
points
and
the
data
we're
getting
through
Synertrex
in
Mineral,
now
with
Motion
Metrics
in
ESCO.
So
we've
got
a
great
position
and
we're
really
excited
about
the
combination
of
the
touch
points
that
we
have
in
the
mine.
Our
technology
skills
are
supplemented
by
digital
as
to
how
we
can
then
help
our
mining
customers
in
the
future
on
process
optimization
and
getting
more
from
less,
which
is
really
what
they
need
to
try
to
do.
So
I
think
we're
in
a
great
space.
On
the
margin
point,
of
course,
we
thought
it was
very
important
today
that
we
are
absolutely
clear
on
the
pathway
to
getting
to
17%
margins
and
we've
explained
that
through
the
course of
the
presentation.
We
are
determined
to
get
there
in
2023.
Are
we
going
to
stop
there?
Of
course,
we're
not.
But
we
want
to deliver
over
the
course
of
the
next
two
years,
give
you
the
evidence
of
execution,
and
then we'll
go
on
from
there.
Ricardo,
on
the
two
points
about
the
structure
of
the
Russian
business
and
it's
all
in
there,
isn't
it?
Yeah.
Well,
of
course,
the
situation
in
Russia
today
is
very
liquid
that
we
still
– but
what
I
can
say
is
that
we
have
invested
in
the last
three
years,
through
Ukrainian
[ph]
invasion
(01:00:45), on
making
sure
that
Russian
customers
understand
that
with
modern
Western
technology,
they
can
improve
efficiency
and
productivity. And
we've
been
very
successful
on
that.
So
everything
is
at
home
now.
But,
of
course,
there
are
big
expansion
that
happened
before
that.
We
were
a
big
player.
So,
we
would
wait
and
see
what
– how
it
develops,
but
I
think
we've
proven
to
our
Russian
customers
that
the
Western
technology –
the Warman pump, HPGRs, our Trio
crushers –
works
pretty
well.
In
terms
of
the
quarter
four
growth,
we'll
talk
about
mining,
but
mining
has
two
really
big
sectors.
There
was
one
on
the
pit
on
the
[ph]
front
end and (01:01:22)
there was
one
on
the
plants.
I
mean,
our
playground
is
mostly
in
the
plants.
And
there
have been
a
delay
on
decisions
on
CapEx
investment
in the
plants
in
the
past
years
and
probably
be
coming in
the
year-end
and
budgets
of
investment
not
been
used.
We
see
a
huge
sprint
on
orders
come
in,
especially
in
the
bottlenecks,
mostly
another
pump,
another
[ph]
HGPR (01:01:44),
another
crusher
here,
there.
More
cycles
to
improve
production.
So,
I'm
glad
to
say
that
that
continues
on
Q1
this
year.
So,
also,
a
very
healthy
OE
growth
on
quarter
four
and
the
thing
will
stay, will
stay
with
us.
Yeah.
And
it's just –
[indiscernible]
(01:01:58) a point I made earlier around the –
it can be
quite
lumpy
in
terms
of
when
the
big
orders
land.
And
actually,
we
had
a
couple
of quite
large
ones
that
we
were
expecting
in
the
fourth
quarter,
for
various
reasons,
just
slipped
into
Q1.
But
it
is
a
very
positive
environment.
We
have
a
really
strong
pipeline,
lots
of
activity.
I
think
your
point
on
Russia
was
the –
are
we
dependent
on
– from
a
supply
chain
perspective
for
supply
within
Russia?
And
that is
not
the
case.
Everything
that
we
do
in
Russia,
we
have
done
that
until
now,
is
based
on
product
that
is
shipped
into
Russia.
We
have
no
reliance
on
Russia
for
components or
anything,
any
other
part
of the
world,
if
that
was
your question.
Okay.
That's
loud
and
clear.
Thank
you
very
much.
Well done.
Our
next
question
comes
from
the
line
of
Robert
Davies
from
Morgan
Stanley.
Robert,
please
proceed.
Yeah.
Morning.
Thanks
for
taking
my
questions.
My
first
one was
just
on,
I
guess,
there's
short-
and
medium-term
cash
targets. Just
kind
of
interested
in
that.
I
know
you
sort
of
guided
to slightly
lower
in the
next
two
years
relative
to
what
you're
seeing
over
the
medium
term.
Just
maybe
if you
could
kind
of
walk
us
though
the
biggest
risks
to
delivering
on
those
cash
targets
and
where
that
extra
CapEx
is
going
over
the
next sort of
24
months.
And
is
it
safe
to
assume that's
going
to
take
a
[indiscernible]
(01:03:25)
or what
are
the
sort
of
relative
sort
of
moving
parts
there? That
was
my
first
question.
Thank
you.
Can
I
just
start
by
saying
we
know
that
the
subject
of
cash
conversion
has
been
a
topic
of
discussion
in
the
markets?
We
thought
it
was
important that
today
we
came
out
with
a
very
clear
analysis
of
where
our
cash
conversion
has
been
and
where
it
is
going
over
the
next
few
years.
And
we
know
that
it's
important
to
deliver
on
the
targets
that
we've
set
ourselves
through
to
2024
and
beyond.
In
terms
of
the
specific
moving
parts,
John?
Yeah.
Morning,
Robert.
So,
I'd
probably
start
by
just
commenting
on
the
2021
cash
conversion,
which
obviously
was
lower
than
we
expect
going
forward.
That
was
really
due
to
the
build
of
working
capital
as
a
result
of,
firstly,
the
cyber
incident,
which
meant
our
revenues
were
very
back end
loaded
this
year.
That
didn't
give
us
time
to
collect
the
amounts
due
from
our
customers,
so
that
will
reverse
as
we
move
into
2022.
Secondly,
with
the
big
build
in
our
order
book,
you
saw
the
difference
between
orders
and
revenue
in
the
year
was
more
than
£260
million
and
therefore,
we've
had
to
be
building
that
inventory
to
support
revenue
that
will
be
delivered
next
year.
So
really
clear
reasons
why
working
capital
was
outflow
this
year.
As
we
move
into
next
year,
we
will
grow
into
that
new
level
of
working
capital
and
therefore,
we
will
be
back
in
the
range
of
20%
to
25%
of
revenues.
And
from
a
cash
perspective,
that
effectively
means
we'll
see
a
broadly
neutral
cash
effect
of
working
capital
through
2022.
So
coming
to
the
free
cash
conversion
targets
which
starts
with
clearly
working
capital
being
in
that
normal
range,
so
I
think
as
we
move
into
2022,
we're
confident
of
that.
And
then
beyond
the
operational
improvement
initiatives
that
both
Ricardo
and Andrew
have
already
talked
to,
especially
with SAP
in
Minerals
and
then
the
digital
supply
chain
initiatives
in
ESCO
will
really
ensure
that
we've
got
underlying
internal
improvements
to
keep
that
working
capital
in
the
right
place.
Then
medium
term
CapEx
spend
1
times
depreciation,
we
think
that's
appropriate
for
the
next
two
years.
There
are
some
specific
good
reasons
to
support
future
growth
in
the
business
that
we'll
be
spending
closer
to
1.5
times
which
is
about
an
extra
£40 million
to
£50
million
a
year,
Robert.
The
big
items
in
there,
the
ESCO
foundry
in
China
to
support
both
operating
efficiency
and
future
growth.
SAP
final
rollout
in
Minerals,
as
well
as,
further
investment
in
some
of
the
technology.
Jon
was
talking
around
the
digital
aspects
of
our
business
especially
on
Motion
Metrics
and
we
are
100%
behind
making
that
investment.
So,
to
your
specific
point
on
risk,
we're
very
comfortable
with
that
90%
to
100%
medium-term
target
and
then
the
80%
to
90%
likewise
is we've
got
a
clear
path
to
it.
Thank
you.
So,
I
guess
partly
picking
up
on
those
comments
and
some
comments
you
made
earlier,
just
in
terms
of
sort
of
the
lean
journey
and
everything
you're
doing
to
sort
of improve
the
underlying
performance of
the
business
itself,
is
there
anything
else
from
a
sort of
manufacturing
footprint
that
needs
addressing?
I
guess,
I'm
just
asking
within
the
sort
of
context
of,
is
there
any
risks
to
sort
of
taking sort
of
one-off
charges
or
restructuring
costs
or
reshaping
the
business,
moving
production
around,
obviously,
kind
of customers'
supply/demand
sort of
moves
around
the
different parts
of the
world,
it's
difficult
sometimes
looking
too
far
out.
But
is
there
anything
on
the
medium-term
horizon
where
you
think
we
need
to
build
a
new
factory, we
need
to
consolidate
these
service
networks,
anything
that
we
should
be
aware
of?
The
answer
to
that
is
no,
Robert.
I
think
John's
explained
clearly
there the
investments
we
need
to
make
over
the
course
of
the
next
couple
of
years,
which
we
have
actually
flagged
before
and
are
very,
very
important.
And
then
from
there,
it's
about
getting
our
CapEx
down
to
closer
to
1
times
depreciation.
Within
that,
we
will
continue
to
develop
the
capacity
that
we
have
through
investment
in
the
existing
facilities,
as
we've
demonstrated
with
some
of the
examples
we
gave
in
2021.
We've
talked
in
the
past
about
a
new
minerals
Heavy
Bay
Foundry.
A
minerals
Heavy
Bay
Foundry
is
a
much
sort
of
simpler
beast
than
ESCO,
high-volume,
low-mix
sort
of –
products –
sort
of
foundry.
So,
we
would
expect
to
be –
if
we
need
to
do
that,
the
jury
is
still
out.
If
we
need
to
do
that,
that's
the sort
of
investment
that
we
will
be
able
to
cover
over
a
couple
of
years
within
the
1
times
depreciation.
So,
we're
very,
very
focused
on
getting
down
to
that
after
we've
gone
through
this
period
where
we
make
these
investments
that
we
need
to
make
to
set
the
business
up
for
the
growth
that
lies
ahead.
Thank
you. And
then
my
final
one,
if
I
can
squeeze
one
more
in,
it's
just
– I
think
you've
mentioned
you were
stepping
up
R&D
spend
a
little bit.
I'd just
be
curious
to
know,
is
any
of
that
sort
of incremental
R&D
money
going
into
developing,
I
guess,
kind
of
more
ESG-friendly
products?
Is
that
likely
to
sort
of
be
a
bit
of
a
continuing
situation over
the
next few
years? Clearly,
it's
becoming
a
more and
more
important
issue.
You've
flagged
it
in
a
few
of
the
slides.
Just
wondering,
I
guess,
where
that
incremental
money
is
going
into
developing
those
products
and
any
uptake
from
customers
for
those
new
things?
Is it
just
becoming
part
and parcel
of
the
overall
selling
package
or
the
customer
sort
of
look
at
the
traditional
products
and
then
just
sort of
more
ESG
kind
of
leaning
bits
as
two
different
pockets
of
spend?
Yeah.
No.
I
mean,
it's
a
huge
driver
of
sustainability.
It's
a
huge
driver
of
where
we
are
investing
further
in
R&D
but
it's
not
in
one
specific
bucket.
It's
pervasive
across
all
of
the
categories,
and
that's
the
existing
product
and
making
them
last
longer,
improve
wear
life
and
so
on,
which
inherently
reduce
the
CO2
footprint.
It's
then
creating
the
new sort
of
sustainable
solutions,
integrated
solutions
that
help
our
customers
use
less
energy
and
less
water.
And
then
it's
also
looking
at
some
of
the
longer
horizon
things
that
also
play
to
that
theme,
which
is
around
all
fragmentation,
characterization,
core
particle
flotation
comes
back
to
what
I
said
about
earlier
about
the
touch
points
we
have
across
the
mine
and
where
we
can
see
things
need
to
be
better.
Mine
is –
one
of
the
ways that
you
get
more
from
less
is
by
processing
less.
And
how
can
you use
discrimination
in
terms
of
the
ore
body
that
you're
actually
processing
versus
that
which
is
waste
because
everything
gets
processed
today,
basically.
So
that's
the
question
that
we're
trying
to solve
for
in
the
longer
term.
So,
yeah,
it's
pervasive
across
the
sort
of
technology
and
R&D
investments
that
we're
making
at
the
moment.
Very
interesting.
Thank
you
very
much.
Our
next question
comes
from
the
line
of
Will
Turner
from
Goldman
Sachs.
Will, please
go
ahead.
Hi.
Good morning,
everyone.
It
would
be
great
if
we
could
just
go
in
a
bit
more
detail
on
how
you
see
the
order
intake
outlook
in
2022.
Clearly,
as
you've
emphasized
throughout
the
conversation,
you're
very
optimistic
on
your
end
market
and
your market
demand
and
some
of
the
new
products
that
you've
launched.
But
is there
any
more
color
you
can
give
in
terms
of
like
order
intake?
For
example,
how
has
the
order
intake
performed
year-on-year
in
the
first
two
months?
And
also,
anything
that
we
need
to
be
aware
of
in
terms
of
orders?
Obviously,
we
got
the
Iron
Bridge
aftermarket
orders.
Should
they
start
to
impact
the
business
this
year?
And,
yeah,
any
type
of
color
on
order
intake
outlook?
That
would
be great.
Thanks.
Okay.
I
mean,
I
sort
of stand
by
the
comments
I
made
earlier
about
how
we
expect
the
profile
to
come
through,
2022
has
started
really
well.
So,
we're
sort
of
halfway
through
the
quarter.
So
but
I –
my
sort
of expectation
at
this
point
is
that
we
will
probably
be
up
year-on-year.
Q4
2021
was
a
massive
quarter
particularly
on
the aftermarket
side.
So,
whether
we
achieve
that
sequentially
remains
to
be
seen.
But
I
come
back
to
the
–
our
markets
are
very,
very
buoyant
around
the
world.
Customers
are
very,
very
focused
on
maximizing
production
activity.
That
plays
to
our
sweet
spot
in
terms
of
the
spare
parts
and
service
that
we
can
provide.
So,
we're
not
seeing
anything
that
sort
of
changes
the
dynamic
at
this
point
in
time
at
all.
Specifically,
you
asked
about
Iron
Bridge,
I
think
that's
[ph]
the
best
start
(01:12:09) right
at
the
end
of
this
year
or
2023. Yeah.
Maybe
2023 because
[indiscernible]
(01:12:13).
Yeah. Because
it was
six
months,
yeah,
six
months
behind.
So,
I
think
that's
all
I
can
say
at
this
point,
Will,
to
be
honest.
Okay.
Sure.
It
was
great.
And
then
now,
if
we
break
down
the
kind
of
aftermarket
order
intake
growth
that
you
had
in
the
fourth
quarter, like
you said,
it
was
very
strong.
But
when
we
look
at
like
mine
production
rates,
they'd
certainly
won't
grow
that
fast.
There's
obviously
an
element of
pricing
which
you
said
is
mid-single
digits.
What
were
the
other
reasons
for
the
aftermarket
growing
so
strongly?
And
yeah,
could
you
break
that
down
a
little
bit
more?
Has
there
been
any
kind
of pre-buying
orders
just
kind
of
a
pent-up
demand
because
you
didn't
see
a
strong
aftermarket
growth
earlier
out
in
2021
and
in
2020?
Yeah.
I
mean,
let
me
make
some
comments
and
if
Andrew, if you
kind
of have
anything
to
add,
please
do
so.
But,
I
think
it's a
combination
of
momentum
building
through
the
course
of
the
year.
So,
as
I
said
in
ESCO,
the
large
mining
machines,
utilization
was
lower
at
the
end
of
the
year
– at
the
beginning
of the
year,
and
it
gradually
built
up
through
the
course
of
the
year,
so
you've
got
activity
ramping
up
and
momentum
going
on
as
we
went
through
the
year.
There
were
specific
parts
of
the
regions
around
the
world
that we
supply
which
were
quieter
earlier
in
the
year.
So,
Canadian
Oil
Sands
for
example
when
oil
prices
were
lower
early
in
the
year,
they
were
slow
to
spend
on
the
OpEx
side.
And
that
really
sort
of ramped
up,
I
think,
in
the
third
and
fourth
quarter,
but
getting
back
to
sort
of
normal
levels.
So,
I
think
those
are
a
couple
of
features
that
I
would
call
out.
Yeah.
And
I
think
you
probably
did
see
the
effect
that
you
mentioned
of
some
deferred
maintenance
earlier
in
the
year,
catching
up
on
people,
and
customers
wanting
to
be
ready
going
into
2022
in
order
to
sort
of
continue
the
journey
of
maximizing
production.
But
in
terms
of
restocking,
destocking,
I
don't think
we
really
saw
any
of
that
in
terms
of
across the
two
businesses.
Andrew or
Ricardo?
I
would
say,
Jon,
that
in
general
terms
what
we
see
on
quarter
four
was
an
accelerating
of
the
uses
of
our
equipment.
When
you
speed
up
a
pump
at
10%,
that
doesn't
mean
10% more
uses,
go
to
20%,
30%
more
because
there
were
increases
a
lot.
So,
we
see
the
production
improvements
given
us
much
more
uses
of
equipment
and
spares.
Also,
we
see
that
as
we –
as
COVID
is
not
out
but
is
still
we're going to
have
to live with
COVID
might
have
seen
more
service
coming
from
– request
of
service
from
our
companies
to
come
and
do
some
service
works.
So,
we
see
a
lot demand comes with that. So, it's
basically accelerating
[ph]
for (01:15:04).
And I
think ESCO very
much
followed
a
similar
trends
in
terms
of,
as
Jon
said,
we
saw
recovery
really
coming
fully
in
the
mining
side
into
Q4
as
the
mines
are now
fully
adjusted
to
COVID
operating
environment.
They're
getting
far
better
utilization
of
machines
as
that
area
normalizes.
So,
there's
no
real
restocking,
destocking,
no other
features
for
me
in
the
fourth
quarter
for
ESCO
where
the
construction
site
that
we
talked
about
earlier,
we
didn't
see
a
seasonal
tail
off.
That
can
remain
strong
through
the
quarter.
And
then,
as
Jon
touched
on
oil
sands,
we
saw
some
delayed
maintenance
orders
starting
to
come
through
as
that
sector
really
started
to
face
up
to
some
of
the
issues
they
had
delayed.
And
again,
the
reason
they
were
delaying
that
was
in
terms
of
COVID
operations
and
having
to
keep
people
in
the
site
safe.
So,
really
just
a full
return
to
normalization
for
me
in
the
fourth
quarter.
Okay.
Great.
Thank
you.
Thanks,
Will.
Operator,
I
think
we've
got time
for
one
more
question.
Perfect.
So
our
next
question
comes
from
the
line
of
Mark
Davies
Jones
from
Stifel.
Mark,
please
go
ahead.
Just
snuck
in.
Thank
you
very much,
Jon.
Hello,
all.
Firstly,
can
I
go
back
to
the
grim
situation
in
Ukraine?
You've
been
clear
on
your
relatively
limited
direct
exposure,
but
two
things.
Firstly,
is
there
anything
you can
say
on
the
current
status
of
that
important
Ferrexpo HPGR
order
given
that
backdrop?
And
secondly,
perhaps
to
broaden
on
Andy's
question
earlier,
what
do
you
think
the
risks
in
terms
of
indirect
impact
on
your
end
markets
might
be? Obviously,
we've
seen
massive
increases
in
energy
prices.
We've
seen
disruption
to
some
supply
chains,
if
not
yours.
Do
you
think
that
could
actually
have
a
material
impact
on
end
demand
elsewhere
in
the
world
this
year?
Yeah. Okay.
Hi, Mark.
So, yeah,
on
the
Ferrexpo
contract,
you'll
recall
that
was
actually
a
multiyear
contract
in
terms
of
delivery.
So,
the
first
phase
was
actually
built
and
shipped,
and
we
have
the
cash
in
2021.
I
think
it
was
about
£10
million in
the
round.
The
rest
of
that
is
in – there's
no
deliveries
in
2022. The
rest
is
in
2023
and
beyond.
So,
that's
how
that
phase
is.
So,
we've
got
no
sort
of
net
exposure
on
that
contract
as
we
sit
here
today,
and
obviously,
we'll
wait
and
see
what
the
future
holds.
Yeah.
So,
that's
a
really
big
question
to
end
on
the
risks.
So,
I
think,
I
would
say
a
couple of
things.
First
of
all,
we're
a
totally
global
business.
So,
if
production
of
commodities
in
Russia
is
essentially
isolated
and
cut
off,
that
is
probably
going
to
create
more
commodity
inflation
where
we
are
today.
But
I
would
expect
that
supply
will
expand
where
it
can
elsewhere
to
try
and
cover
that
off.
Obviously,
the
big
macro
thing
that
we
should
all
worry
about, not
that
we
can
–
sitting
here,
it's
above
my
pay
grade,
but
if
we
see
commodity
prices
rise
to
such
an
extent
that
there
is
demand
destruction
and
stagflation,
then
that's
a
different
world
that
we're
in
today.
So,
I
mean,
I
hope that's
low
risk,
but
it
clearly
is
a
possibility
that's
out
there
at
the
moment.
So,
we
think
about
that.
But
as
we
sit
here
today
in
terms
of
other
indirect
effects,
I
think
the
global
nature
of
our
business,
the
fact
that
we
have
regional
manufacturing
and
supply
chain
in
large
parts
of the
world,
and
as
demonstrated
in
2021,
means
that
we
are
perhaps
more
insulated
than
others,
actually.
The
vertically
integrated
operating
model
that
we
have
is
highly,
highly
resilient.
And
so,
I
would
– whatever
happens
I
would
expect
us
to
fair
reasonably
well
and
probably
better
than
most
because
of
the
footprint
that
we
have.
Thank
you
very
much.
Thanks, Mark.
Okay.
Well,
thank
you,
everybody, for
your...
This concludes
the
Q&A
session.
So
I'll
hand
back to
you
for
any
closing
remarks.
Well,
thank
you
very
much,
everybody,
for
your
questions.
Great
to have
the
opportunity
to
talk
to
you
in
what
is
a
very,
very
challenging
time
around
the
world.
But
as I
said,
I
think
Weir
is
very
well
set
for
the
long-term
and
excited
about
what
we
can
deliver.
So
– and,
of
course,
if
there
are
any
further
questions,
then
our
IR
team
will
be
ready
today
to
help
you
with
those.
So
thanks
again
and
have
a
good
day.