Minerals: Sustainable long-term growth Capital Markets Day London, 10 June 2015
Introduction Keith Cochrane, Chief Executive
Agenda 3 Introduction Keith Cochrane, CEO Minerals: high quality, high performing market leader Dean Jenkins, Divisional MD Streamlining the global manufacturing platform Dave Athey, RMD Asia Pacific Aligning our resources with…
Strategy to deliver long term growth 4 Coherent and complementary Group 3 divisions with shared characteristics Serving structural growth markets Highly engineered equipment Extreme and remote environments Intensive aftermarket…
The world needs more energy and natural resources 5 The right long term markets Global development curve1 % of population that is urban 100 90 Japan Chile Structural growth drivers remain intact 80 Brazil Korea UK USA Russia…
Resources being depleted, replacement resources more complex 6 Substantial long term investment unavoidable Copper, nickel, zinc undersupplied by 20172 12% Iron Ore 10% Existing resources being depleted 8% Copper 6% Nickel 2015…
Short term market-led challenges 7 Commodity price declines intensifying pressure on customers Equipment market drivers Impact on mining majors revenues of commodity price declines1 Falling commodity prices driving reduced capex…
A robust platform for Minerals growth 8 Leadership in core mill circuit technologies Process critical products Focused on high wear and abrasive applications Unrivalled aftermarket support of process critical equipment Emerging…
Minerals: high quality, high performing market leader Dean Jenkins, Division Managing Director How we are Where are How we will sustaining we today grow our position
Today Sustain Grow Top quartile safety performance 10 Sending people home safely to their families Weir Group total incident rate performance 4.0 3.4 3.5 75% improvement over 3 years 3.0 2.5 2.0 1.6 20% improvement in…
Today Sustain Grow Weir Minerals: A global leader 11 1 in slurry handling equipment and associated spare parts Design, manufacture 2014 revenue: 2014 operating and support of mining Addressable 1,128m and minerals processing…
Today Sustain Grow Responsive operating model 12 Regional ownership supported by global specialist functions Division MD Functions Regional accountability for total business operations Local ownership of customer,…
Today Sustain Grow A diverse global business 13 Unrivalled service centre network supported by regional manufacturing model Europe, North Africa & Russia (c.1,300 people) 28% 15% revenue revenue North America (c.1,500…
Today Sustain Grow Outperforming the market 14 Business model in action: Aftermarket resilience in challenging mining markets Aftermarket growth outstripping global ore production trends Aftermarket revenues vs. ore production1…
Today Sustain Grow Outperforming the peer group 15 Business model in action: Agile, flexible and efficient operating model Growth in up-cycle, revenue resilience in Revenues vs. Peers1 down-cycle 160 150 Aftermarket centric…
Today Sustain Grow Delivering strong financial performance 16 Strong revenue growth and market-leading margins Over 40% constant currency revenue growth Revenue (m)1 Original equipment Aftermarket 6% CAGR excluding acquisitions…
Today Sustain Grow Minerals division product range 18 Expanding beyond slurry transportation, across full mill circuit Comminution Mill circuit / slurry transportation Hydrocyclones Cyclones Mill Jaw crusher liners PD…
Today Sustain Grow Growing range of process critical equipment 19 Leveraging leadership positions across the mill circuit Diversifying revenue base1 Focus retained on aftermarket intensive products1 Slurry pumps Slurry pumps 3% 5%…
Today Sustain Grow Broad exposure across mining markets 20 Aligned to higher growth commodities and low-cost production Three quarters of revenues from mining markets Two thirds of mining exposure relates to copper, Sand & aggregates…
Today Sustain Grow Supporting a diverse range of customers 21 Key supplier across the full spectrum of miners Weir Minerals equipment found on the majority of global mines Top customers1 23% Customer A Top 10 represent only c.23%…
Today Sustain Grow Meeting the challenge to reduce costs 22 Delivering lower total cost of ownership Customers seeking supply chain savings Increasing customer efficiency New technologies reducing operating costs, increasing yields…
Today Sustain Grow Minerals market outlook 23 Adapting to challenging market conditions Global mining capex (USm)2 250,000 -11% CAGR +3% CAGR Capex recovery will reflect commodity 200,000 supply/demand balances 150,000 Gradual…
Today Sustain Grow Strategy to continue to outperform the market 24 Streamlining Consolidation of manufacturing plants, aligning workforce with demand manufacturing Establish and leverage best-cost campuses (Malaysia, China, South…
Streamlining the global manufacturing platform Dave Athey Regional Managing Director Asia Pacific
Today Sustain Grow Agile and responsive manufacturing platform 26 Core manufacturing locations supported by best-cost manufacturing facilities Regional manufacturing facilities Best-cost facilities Copyright 2015, The Weir…
Today Sustain Grow Creating best-cost options for customers 27 Interconnected global manufacturing / supply approach Aftermarket demand driving growing capacity requirements Leverage specific capabilities across the network…
Today Sustain Grow Aligning capacity with demand 28 Consolidating regional manufacturing footprint Five smaller manufacturing units absorbed into larger regional hubs: North America; consolidating five manufacturing sites into…
Today Sustain Grow Range of Value Chain Excellence initiatives 29 Over 50 VCE projects underway across the division Five themes of VCE Focused on five key themes Targeting improved outcomes for customers and reduced inventory and…
Today Sustain Grow Continuous improvement underpins margins 30 Case study: applying our lean capability Kaizen project to reduce cost and lead time of HPGR tyre production Average tyre has 20,000 holes to be drilled, requiring high…
Today Sustain Grow Case study: Purpose-built Malaysian campus 31 70m investment to increase best cost capacity Will create Groups largest manufacturing facility State-of-the-art foundry, machine shop and rubber processing line…
Today Sustain Grow Common ERP system across Minerals 32 By 2017 all businesses will operate on a standardised SAP platform 15 ERP systems to be consolidated to 1 15 Project commenced 2013 Initial rollout complete in Malaysia 1…
Aligning our resources with customers Ricardo Garib Regional Managing Director Latin America
Today Sustain Grow Solutions that play to our core competences 34 Service is about close relationships and customer proximity Weir Minerals service centre locations Field support is paramount in securing aftermarket loyalty…
Today Sustain Grow Solutions that play to our core competences 35 Service is about close relationships and customer proximity Providing specialist skills and knowledge in relation to process critical equipment Maintaining focus on…
Today Sustain Grow Providing a portfolio of services 36 Targeted services customised and delivered around the globe Increasing Performance Ensuring Reliability Application and process improvements OEM maintenance services Process…
Today Sustain Grow Improving customer efficiency 37 Case study Cavex: Chinalco-Toromocho, Peru Copper mine situated at altitude of 4,500m Reserves of 1.5bn tonnes of copper, initial development cost of 3.5bn Operations began…
Today Sustain Grow Aligning our resources with customers 38 Case study Cavex: Chinalco-Toromocho, Peru Competitors hydrocyclones installed at commissioning Failed to meet customer performance requirements Original competitor…
Today Sustain Grow Aligning our resources with customers 39 Case study Cavex: Chinalco-Toromocho, Peru 4 months into operations a trial programme initiated Weir plus other competitor Weir cyclone clusters Competitor cyclone…
Today Sustain Grow Improving customer efficiency 40 Case study Cavex: Chinalco-Toromocho, Peru Result: Cavex cyclones only across the site Customer benefit: Improved process through reduced circulating load 15% greater…
Today Sustain Grow Improving customer efficiency 41 Case study Warman: Esperanza, Chile Copper and gold mine, situated at altitude of 2,300m Expected life of 18 years Competitor mill circuit pump failed prematurely Equipment…
Today Sustain Grow Improving customer efficiency 42 Case study Warman: Oil Sands, Canada Canadian oil sands have the worlds third-largest oil reserves Expected life of this development is 70 years Customer focused on reducing…
Today Sustain Grow On-site relationships: a strong barrier to entry 43 Success can be attributed to being there for our customers: Regional structure c.120 service facilities world wide close to customers servicing their needs…
Developing mutually profitable global relationships Gavin Dyer Regional Managing Director Africa and Middle East
Today Sustain Grow The power of customer partnerships 45 Further develop long-term relationships globally and regionally Being wherever and whenever our customers need us Weir positioned as trusted partner of choice Create…
Today Sustain Grow Award-winning collaboration 46 Case study: Anglo American Global Framework Agreement Rationale for 2013 strategic alliance Customer seeking step-change in efficiency across global operations Simplifying supply…
Today Sustain Grow Mutually profitable relationships 47 Second global customer agreement secured with Kinross Global framework agreement signed in October 2014 Preferred mining equipment supplier to Kinrosss global operations…
Today Sustain Grow Mutually profitable relationships 48 Case study: Cavex CVXT ceramic lined cyclones Customer: Phola coal processing plant in South Africa (JV between Anglo American and BHP Billiton) Original cyclone cluster…
Today Sustain Grow Becoming trusted partner of choice 49 Continuing efforts to forge ever-stronger relationships with our customers Aligned to industry trends seeking ever greater efficiencies Leveraging Weirs technology and global…
Expanding into new territories Cees Zaalberg Regional Managing Director Europe, North Africa and Russia
Today Sustain Grow Extending our competitive advantage 51 Key pillar of Minerals strategy Continue to expand globally to be ever closer to customers Global market comprises many small sub-markets and customers Systematic approach…
Today Sustain Grow Acquisition 52 Case study: Scandinavia, Sweden 2014 sales: 10.3m (including Gema) 35% CAGR from 2010 Gema business in Northern Sweden acquired in 2012 Fully integrated into Weir Minerals Sweden Provides…
Today Sustain Grow Direct sales presence 53 Case study: Kazakhstan 2014 sales: 9.4m 23% CAGR from 2010 Established direct presence in Kazakhstan in 2014 100+ active mines in Kazakhstan - Significant reserves of zinc,…
Today Sustain Grow Changing structure 54 Case study: Caribbean / Colombia / Mexico 2014 sales: Mexico: 30m (47% CAGR from 2010) Colombia & Caribbean: 5m (4x increase from 2013) Prepared to adapt Changed from North American…
Today Sustain Grow New opportunities for geographical expansion 55 Russia Opening 2 new service centres in far east by end of 2016 to support large end users in diamond sector Investigating Western Russia, particularly sand &…
Comminution: a significant growth opportunity Aaron Ravenscroft Regional Managing Director North America
Today Sustain Grow Minerals division product range 57 Growing beyond slurry transportation, across full mill circuit Comminution Mill circuit / slurry transportation Hydrocyclones Cyclones Jaw crusher Mill liners…
Today Sustain Grow Building a competitive product portfolio 59 Differentiated offering provides opportunities in capital constrained environment Product line Mill liners Screens HPGRs Crushers Entry route Weir Linatex…
Today Sustain Grow Accelerating our strategy Trio 60 Gaining access to complementary products and markets Trio Engineered Products acquired in October 2014: Trio addressable market by geography1 Addressable market 2bn+; sand &…
Today Sustain Grow Trio integration progress and early wins 61 Business integration near complete Functional integration complete 70 strong integration team from across Minerals Weir integration plan over 2,000 actions completed…
Today Sustain Grow Sand & aggregates markets 62 Attractive growth profile, expands addressable market Construction market growing strongly (4%-6% p.a.) World construction aggregates demand1 Construction industry output 11% of…
Today Sustain Grow Weirs comminution market positioning 63 New entrant with customer credibility and differentiated, cost-effective offering Comminution now 25% of addressable market Targeting doubling of market share by 2019…
Innovation through shared insights John McNulty Division Director of Technology
Today Sustain Grow Following best practice innovation model 65 R&D investment increased by 42% in last 5 years Types of innovation best practice model Type 1. Type 2. New New Type 1: New capability provides core knowledge;…
Today Sustain Grow New capability: providing core knowledge 66 Current partnerships and activities include: Weir Advanced Research Centre (WARC) enhanced wear modelling, emerging materials and surface technologies Horizon 2020…
Today Sustain Grow New capability: providing core knowledge 67 Case study: new alloys for wearing parts Refractory carbide alloys Patented new technology Substantially improved wear life Hard particles in metal only where needed…
Today Sustain Grow New solutions: addressing new markets 68 Existing technology in new markets Swellable packers first year product sales 8m Collaboration with Oil & Gas utilising Minerals elastomer expertise Frac pad abrasive…
Today Sustain Grow New solutions: addressing new markets 69 Case study: data-driven decisions Synertrex monitoring and control system: one system, many applications across Weir Group Synertrex uses big data to provide a deeper…
Today Sustain Grow Sustaining: incremental growth 70 Pipeline of incremental upgrades to core products New & hybrid vertical pump - addressing brownfield opportunities WARMAN MC 760 - installed worlds largest slurry pump CAVEX…
Today Sustain Grow Sustaining: incremental growth 71 Case study: strengthening the comminution family New TRIO crusher range Reduced machine operating stresses and higher crushing forces for wider range of applications Optimised…
Today Sustain Grow Future innovation 72 R&D ring-fenced, increasing investment to 1.5%-2.0% revenue Best-in-class products built from significant technology strengths Materials science, hydraulic design, wear mechanics and…
Key takeaways: sustainable long-term growth Keith Cochrane, Chief Executive
Key takeaways 74 Strategy to continue to outperform in challenging markets Market drivers Strategic initiatives Falling commodity prices driving New technology trials creating OE opportunities reduced capex Expanding and cross…
Positioned for sustainable profitable growth 75 Oil & Gas Minerals Power & Industrial Leading upstream surface Niche provider of Process critical Leadership in core mill equipment & service engineered valves, products circuit…
Appendix 1 Overview of key products
Minerals Division product range 77 Expanding beyond slurry transportation, across full mill circuit Comminution Mill circuit / slurry transportation Hydrocyclones Cyclones Jaw crusher Mill liners Horizontal HPGR screen PD…
Targeting critical process equipment with high-wear characteristics 78 Annual spares Mill circuit process Weir equipment Wear rate to OE revenue ratio Comminution High Pressure Grinding Rolls Medium 40% Crushers Medium 35% Mill…
Core product slurry pumps 79 Uses and markets: Mining - mill circuit, process plant, tailings, pipeline transport Flue gas desulphurisation (FGD) Dredging, oil sands and sand/gravel Brand portfolio with market leading wear life…
Product overview cyclones 80 Uses and markets: Mining & minerals classification and tailings FGD / Power Coal classification Oil sands Waste water and flotation CAVEX design significantly reduces turbulence, enhances efficiency…
Product overview mill liners 81 Uses and markets: Mining; industrial minerals; FGD Rubber and composite mill liners protect the mill shell & create a grinding action within the mill through the use of lifter bars Weir has…
Product overview High Pressure Grinding Rolls (HPGRs) 82 Uses and markets: Mining - mill circuit, minerals crushing Mineral particles broken by compression in packed particle bed; not by direct nipping of the particles between two…
Product overview cone crushers 83 Uses and markets: Hard rock mining secondary, tertiary, and quaternary crushing Construction aggregates mixed demolition debris, crushed/broken concrete, asphalt, sand, gravel, quarried stone Key…
Product overview screens 84 Uses and markets: Used behind a primary crusher or to finish screening Versatile options cover a broad range of applications in multiple industries such as industrial minerals, sand & aggregates (mobile…
Appendix 2 Participant biographies
Attendees Weir Group 86 KEITH JON ANDREW COCHRANE STANTON NEILSON Chief Executive Finance Director Director of Strategy & Corporate Affairs Keith joined the Weir Group as Finance Director Jon joined the Weir Group as finance…
Attendees Weir Group 87 TONY STEPHEN RAYMOND FINOCCHIARO CHRISTIE BUCHANAN Regional Managing Head of Investor Head of Group Director, China Relations Communications and India Tony has more than 16 years experience living Stephen is a…
Attendees Minerals Division 88 DEAN PHIL JOHN JENKINS MORRIS HOLDING Divisional Managing Divisional Divisional Human Director Finance Director Resources Director Appointed Divisional Managing Director in August Chartered accountant…
Attendees Minerals Regional Managing Directors 89 DAVE RICARDO GAVIN ATHEY GARIB DYER Managing Director Managing Director Managing Director Asia/Pacific Latin America Africa/Middle East Regional MD for APAC from 2014 and Appointed…
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