Mincon says acquisition of Swedish group to grow revenues 20% this year

Irish engineering company hopes to overcome capacity constraints as year starts with ‘record sales’

Joseph Purcell from Mincon (centre). Photograph: Maxwells

Joseph Purcell from Mincon (centre). Photograph: Maxwells

 

Irish engineering group Mincon’s acquisition of Swedish company Driconeq should grow revenues 20 per cent this year, the group has said.

The company which specialises in the design, manufacture, sale and servicing of rock-drilling tools and associated products paid €8 million for the Swedish group as it gears up to re-engineer its production to satisfy customer demand.

Mincon chairman Patrick Purcell said the group is “not planning to slow down”, noting that the year has started with record sales.

In the group’s annual report for 2017, Mr Purcell signalled that capacity in key locations is limited, something the executive management team needs to focus on in an effort to drive efficiencies and reduce value lost in freight, overtime and supply side issues.

In his review of the group’s activities in 2017, chief executive Joseph Purcell also flagged the issues surrounding increased freight costs.

“We believe we have created a good strategy but are challenged to deliver it efficiently in the face of the sudden sharp growth rates.

“We have spent large amounts on freight to avoid late delivery, we have worked production past its optimum levels, resulting in overtime and machine breakdowns. We have yet to bring the added capacity on stream to address the order book back log,” he admitted noting that once additional capacity is operational “there should be substantial additional profitability”.

On the whole, Joseph Purcell recounted a strong year for the group despite the constraints resulting in the group being forced to limit sales.

During the year Mincon took a number of actions as part of its plan to increase its distribution business including increasing the footprint of its Illinois, US, plant by 19,000sq ft, leasing a factory in Perth, Australia, for a newly launched start-up drill pipe manufacturing operation, commissioning a steel warehouse as a manufacturing facility in Shannon and converting a warehouse in Sheffield, UK, to a manufacturing plant.

All of those capacity increases are expected to be operational this year.

In terms of their business in East Europe and the Nordic regions, Mincon said its Nordic division is set for growth this year after the group had to absorb start-up costs of €1.2 million in that division last year.

Stronger profit

Mincon reported stronger profit for 2017, with earnings and revenue ahead of expectations, in its recently posted full year results.

Operating profit grew 38 per cent to €14 million while revenue increased 28 per cent to €97.4 million. Pretax profit was €12.7 million, compared with €11.3 million a year earlier.

Remuneration of key staff and board members increased almost 30 per cent this year with the chief executive seeing his total remuneration rise 38 per cent to €299,000.

The sales director, Thomas Purcell, took a €21,000 increase in remuneration to €230,000. Fees to chairman Patrick Purcell were €34,000 in the year.

The Purcell family control Mincon through a company called Kingbell which holds 56.84 per cent of the issued share capital. Setanta Asset Management is the second largest shareholder with 14.58 per cent of the group.

In a positive conclusion of his statement focusing on results from 2017, the chief executive said the group wasn’t under pressure to grow revenue and noted while their profitability didn’t improve from when they came to market in 2013, “that was in retrospect the final year of the last cycle, and this looks very much like the first one of the current upturn”.