Mincon results disappoint due to pricing pressures

Engineering group reports 40% jump in revenues but margins are hit by pricing pressures

Irish engineering group Mincon grew revenues in the first half of 2015 by 40 per cent, but operating margin fell by 22 per cent due to a pressure on pricing.

Revenues rose by 40 per cent to €32.7m in the six months to June 30th 2015 compared with the same period in 2014, largely driven by additional revenue from acquisitions completed in the intervening period. This increase in revenue contributed to an improvement in the gross margin to 43 per cent in Q2 2015 compared to 38 per cent in Q1 2015. Operating profit margin fell from 22 per cent in H1 2014 to 14 per cent, due to the combination of lower margins from acquired entities and a pressure on pricing in its market.

Joe Purcell, chief executive officer, said that the continued downturn in the mining industry has had an impact on market pricing and also on global sales of exploration product and capital equipment.

“This cyclical decline in our largest sector has been driven by the further decline in the commodity prices of base and precious metals. Given this market environment, we are pleased that demand for Mincon manufactured product has remained stable, on a like for like basis,” he said.


In a note, Colin Sheridan of Davy Stockbrokers said that "while the second half of 2015 should see stronger margins and revenues than H1 as a whole, we expect to downgrade our estimates on the back of this set of results".

Looking to full-year 2015, Mincon said that the environment “remains challenging” and that the company is taking steps to adjust the group’s cost base and working capital to current trading levels.

“The risk posed by the volatility in currency markets remains a concern,” Mincon said.

Mincon will pay an interim dividend of € 0.01 per ordinary share, payable in September 2015.

Fiona Reddan

Fiona Reddan

Fiona Reddan is a writer specialising in personal finance and is the Home & Design Editor of The Irish Times