Revenues down 15% as Mincon suffers from weak mining market

Revenues at Irish engineering group Mincon fell by 15 per cent to €23 million in the six months to June 30th 2014, due to weakness in the global exploration and mining market driven by the decline in the price of precious metals.

Mincon, which specialises in the design, manufacture, sale and servicing of rock drilling tools and associated products, saw operating profits fall by 37 per cent to € 5.2m from € 8.2m. Mincon announced its first interim dividend payment, of €0.01 cent.

Kevin Barry, chief executive officer, said that weakness in the global exploration and mining market continued into 2014 impacting the drilling products market in which it operates, particularly in relation to third party product. "This weakness, combined with the significant devaluation of certain key currencies in which we trade, has impacted upon the group's result for the period resulting in a 15 per cent decline in revenue and 21 per cent decline in profit attributable to shareholders," he said.

Demand for third party product also continued to be weak resulting in invoiced sales of third party product dropping by 38 per cent in 2014 compared to the first half of 2013.

“This was primarily due to the slowdown in the exploration and mining market, particularly in the EMEA region. However, we are confident that revenue from third party product sales will improve in the second half with the addition of new agencies for the sale of drill rigs in Southern Africa,” Mr Barry said.

Mincon also announced that it has agreed to acquire three companies in deals totalling € 8.7 million, for a shareholding of 60 per cent or 65 per cent in all three companies.

“These acquisitions will serve to both increase Mincon’s product offering and extend Mincon’s distribution network,” Mr Barry said.

On August 19th 2014, Mincon entered into an agreement to acquire a 65 per cent stake in Rotacan for an upfront cash payment of CAN$10.2 million (€ 7.0 million), with an option to acquire the remaining 35 per cent shareholding in five years. On the same day Mincon also agreed to purchase a 65 per cent stake in Australian ABC Products for an upfront cash payment of AUS$0.9 million (€ 0.6 million) and a capital contribution of AUS$1.1 million (€ 0.8 million), with options to acquire an additional 30 per cent shareholding in three to four years. Finally, Mincon has also agreed to purchase a 60 per cent stake in Omina for an upfront cash payment of € 0.3 million, with options to acquire the remaining 40 per cent shareholding in three to four years. Omina is established in Windhoek, Namibia.

The group also announced that chairman PeterE Lynch has been appointed to an executive role with the company, in a consultancy capacity and with particular emphasis on M&A activity. As such, Mr Lynch will step down from the role of chairman from Friday, August 22nd. Padraig McManus will assume the role of independent chairman