Mincon ‘outlook remains tough’

The Shannon-based engineer Mincon Group that provides rock drilling goods yesterday said the downturn of the mining industry amid the world commodities price slump had hit profits and that the outlook “remains challenging”.

The firm, which first came to the market in November 2013 and has over a dozen offices spread across the world, said it is now looking to cut costs, but will continue to seek out acquisition targets and expand into new markets.

It reported a 13% drop in operating profit to €4.5m in the six months to the end of June from a year earlier, as the costs of recent acquisitions and restructuring and a lower margin due to the pressures facing the mining industry hit home.

Total sales increased 40% to over €32.7m.

It said it paid an effective tax rate of 21% in the first six months.

Net profit fell 20% to over €3.5m.

The firm plans to pay an interim dividend of 1c a share.

Davy Stockbrokers said a pre-tax profit of €4.49m was well behind the broker’s own forecast, reflecting in part the pricing squeeze facing the industry.

But the broker said that Mincon may benefit from a revenue boost in the second half of the year.

Mincon said that it expects its cost-cutting plans to show through in improvements in net margins in the second part of this year.

“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,” Mincon said.

“This cyclical decline in our largest sector has been driven by the further decline in commodity prices of base and precious metals.

“Given this market environment, we are pleased that demand for Mincon manufactured product has remained stable,” it said.

“Overall we have significantly improved our market position.

The investment strategy remains intact and we are ambitious for further growth,” the company said.