Mincon's H1 revenues sink by 15% due to weakness in mining market

Wednesday 20 August 2014 17.51
Mincon today reported a 15% drop in half yearly revenues for the six months to the end of June
Mincon today reported a 15% drop in half yearly revenues for the six months to the end of June

Engineering company Mincon has said its chairman Peter E Lynch will step down from the role to take up a new  executive role with the company. 

The company said that senior independent director Padraig Mcmanus will assume the role of independent chairman.

Meanwhile, Co-Clare based Mincon today reported a 15% drop in half yearly revenues for the six months to the end of June. 

Operating profits fell by 37% to €5.157m from €8.192m due to weakness in the global exploration and mining market, which was driven by the decline in the price of precious metals. 

But the company said that its board is recommending the payment of an interim dividend of one cent per ordinary share, the group's first as a public company.

"Given the macroeconomics environment, we are very pleased that demand for Mincon manufactured product has remained stable, with the 7% reduction in revenue in sales of Mincon product solely due to the weakening of certain key currencies such as the South African rand and the Australian dollar, which devalued on average by 18% and 14% respectively," the company's chief executive Kevin Barry said.

Mincon makes a range of rock-drilling hammers and bits for a variety of industries including mining exploration, mining production, oil and gas drilling, water well drilling, geothermal drilling and seismic drilling.

The company said it believes the weakness in the global drilling market started to abate in the second quarter of 2014 with invoiced sales 14% ahead of the average invoiced sales for the previous three quarters. "This trend has continued into the third quarter of 2014 and we expect it to continue for the remainder of the year and into the fourth quarter," it added.

Shares in Mincon were 6.2% by the close of business in Dublin following its latest results.

Mincon agrees deals for stakes in three companies

The company also announced deals to buy stakes in three companies in transactions worth a total of €8.7m. Mincon said the three deals will be funded from its existing cash resources and they are expected to boost earnings from the first half of next year.

The companies are Canada's Rotacan, Australia's ABC Products and Omina Supplies which is based in Namibia.

Mincon will pay $10.2m for a 65% stake in Rotacan, which specialises in the design, manufacture and sale of rotary blast hole drill bits, drill pipe and other ancillary products for use in the open pit mining industry. It had revenues of €8.4m for the year to the end of June with after-tax profits of €1.2m. 

It has also purchased a 65% stake ABC Products in Australia, with an option to buy another 30% shareholding in three to four years. The deal will increase Mincon's market share of the Australian market.

Mincon also said it had bought a 60% stake in Omina for an upfront cast payment of €0.3m, with options to buy the remaining 40% shareholding in future years.

"These investments represent exciting opportunities for Mincon to increase and diversify its product offering and extend its distribution network," commented its CEO Kevin Barry.