Revenues up 29% at Irish engineering group Mincon

Irish engineering group Mincon has reported revenues that rose 29 per cent from €54.4 million to €70.2 million last year despite what it called challenging conditions.

The Clare-based company, which specialises in the design, manufacture, sale and servicing of rock drilling tools and associated products, said full-year operating profit declined 3 per cent in 2014 to €9.9 million from €10.3 million a year earlier.

An increase in gross profit was more than offset by a 39 per cent rise in operating costs to €18.3 million linked to the seven acquisitions the group carried out between August 2014 and March 2015. Those deals added €4.1 million in operating expenses, the group said.

Mincon, which is listed in Dublin, said it implemented a number of cost reduction efforts during the year but also invested in sales and research and development personnel to support further growth.

The company said sales of Mincon-manufactured products rose by 26 per cent or €11 million last year. Revenue from the group’s down-the-hole (DTH) hammer represented 52 per cent of group turnover, down from 59 per cent in 2014.Sales of reverse circulation (RC), horizontal directional drilling (HDD) and rotary product combined represented 20 per cent of overall revenues, up from 18 per cent last year.

Non Mincon-manufactured products

Sales of non Mincon-manufactured product jumped 37 per cent or €4.8 million year-on-year. This increase was driven by the opening of additional sales offices in Chile, Australia, Tanzania and Namibia.

Half of all group revenues came from Europe, Middle East and Asia (EMEA) with the Americas representing Mincon’s second most significant market, accounting for 29 per ent of turnover. Revenues in the company’s Australasia division rose from 17 per cent of group turnover to 22 per cent last year.

The full-year gross margin reduced by 3 per cent to 40 per cent in 2015 Mincon said, primarily due to the increase in third party product sales, which earn a lower margin.

Mincon’s balance sheet remains strong with net assets of €97.9 million and net cash of approximately €38.6 million available for investment.

The group’s board has recommended is recommending the payment of a final dividend for the year of 1 cent per ordinary share.

Chief executive Joe Purcell said the business environment remains challenging and it has yet to see evidence that demand will change significantly during 2016. However, he said management are taking steps to adjust the group's cost base and working capital to reflect current trading levels.

“We are pleased with the robustness of our business model and the strong operating margin delivered by the group,said Mr Purcell.

“The exploration industry is cyclical in nature, driven by movements in the commodity prices of base and precious metals. Therefore our focus has always been on the production mining and other market sectors such as waterwell, geothermal and construction drilling, which are less cyclical and provide a more stable platform for the long term success and growth of the business. We are ambitious for further growth,” he added.