Profits before tax at Irish engineering group Mincon topped €9 million in the first half the year, up 13 per cent on the same period in 2021 with its growing presence in North American markets helping to drive revenues.
In first-half results published on Monday, the company, which specialises in the design, manufacture, sale and servicing of rock-drilling tools and associated products, reported revenue growth of 27 per cent compared with the first six months of 2021.
Underpinning the performance, Mincon said “strong organic growth” had resulted in high demand for tools as the global mining industry — which accounts for more than half of the group’s sales — continued to recover this year.
Mincon’s acquisition of US drill pipe manufacturer Spartan Drilling Tools earlier this year and Canadian rock-drilling equipment distributor Attakrock had also increased its market share in North America, it said.
However, the group said the sharp increase in revenues had been largely offset by pressure on its margins from inflation. The group passed the increases it saw in the price of raw materials in 2021 on to customers in the first quarter of the year.
While operating profits at the group jumped 18 per cent to €8.8 million, operating costs also increased 18 per cent to €18.2 million in the first six months of the year. Mincon’s cost of sales, meanwhile, climbed 32 per cent to €58 million, squeezing the group’s total gross margin from 34.2 per cent last year to 31.8 per cent at the end of June.
“We did witness some easing on margin pressure due to customer price increases towards the end of the period,” Mincon said on Monday, resulting in the group having confidence in an improved margin for the second half of 2022.
Mincon chief executive Joe Purcell said the group had carried positive momentum from 2021 forward into 2022 “by continuing to catch up on our strong order books for all our markets”.
However, he said, “The strong growth in revenue has been accompanied by some pressure on our margins ... due to cost increases across many fronts, but particularly in raw materials and energy, as well as freight, partly arising from the use of air freight to reduce our order backlog.
“Sea freight conditions remain challenging, with no improvement in sight, so we will continue our current policy of holding high levels of finished goods inventory so that we can give our customers the excellent service that they expect from Mincon.”
Mr Purcell said: “There has been a recent reduction in the constraints around raw material availability, which has enabled us to start unwinding raw material inventories, due to better supply conditions.”
The group said it was confident of improving its margin performance in the second half of the year as supply pressures continued to improve.