Mincon records strong year as profit rises to €14m

Irish engineering group Mincon reported stronger profit for 2017, with earnings and revenue ahead of expectations.

The company, which specialises in the design, manufacture, sale and servicing of rock-drilling tools and associated products, also announced it had bought Driconeq for €8 million.

The latest results for Mincon showed operating profit was €14 million for the year, a 38 per cent year on year rise. Revenue was 28 per cent higher at €97.4 million, while earnings before interest, taxation, depreciation and amortisation were €17.1 million. Pretax profit was €12.7 million, compared with €11.3 million a year earlier.

Chief executive Joe Purcell said the year was stronger for the company than the results suggest.

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“Out of the €97 million of revenue, the €75 million revenue for Mincon manufactured product was nearly the same as the group total sales in the prior year. While the mix changed as we added more products, still the gross margin was maintained at 39 per cent, just shy of the 40 per cent the previous year,” he said.

Pressure

“The protection of the gross margin is important to us, and we see pressure there as it begins to reflect the increasing cost of supplies to the group.”

He noted an increase in the cost of raw materials to the group was partly due to the chance in mix, but some was raw material costs being absorbed by the group.

“The market is not yet taking sustainable price increases, and while we make good products, some great products, still we do not seek to be a price leader, nor do we need to be,” Mr Purcell said. “Having said that, we expect to see upward price movement for the product ranges through 2018.”

The acquisition of Driconeq follows Mincon's purchase of Finland's PPV, which has given Mincon a new suite of products, and Viqing, a start-up drill pipe manufacturer in Sweden.

Looking ahead to 2018, the company expects a run rate revenue of more than €120 million.

“If we can build sustainable organic growth on top of the acquisition growth, we will deliver another very strong year,” Mr Purcell said.

“The group is growing strongly, we have continued to build and invest, and we have made great strides in improving our culture and control. Confidence is high in the group, in our products, our management and our people, and we have tremendous opportunities in front of us that we have yet to realise in our revenues and returns.”