Irish engineering group Mincon saw profits plunge by almost half last year as its revenue streams were hit by disruption in the mining industry. The Dublin-listed company, which specialises in the design, manufacture, sale and servicing of rock-drilling tools and associated products, published its full-year results for the year ended December 31st, 2023, on Monday.
The group made a profit of €7.5 million in the year, which was down from €14.7 million the year before. Group revenue amounted to €156.9 million, which was a decrease of 8 per cent versus 2022. The company said exchange rate headwinds accounted for 5 per cent of the contraction.
Mining revenue decreased by 16 per cent, with contraction across all the company’s mining regions, “driven in part by customers resetting stock, post-Covid disruption”.
Construction revenue was up 2 per cent on a constant currency basis, although reported revenues fell by 2 per cent. Earnings before interest, taxes, depreciation, and amortisation (EBITDA) of €21.1 million were slightly ahead of guidance, but reflected a 23 per cent reduction on 2022.
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“This was a result of the lower revenues and reduced margins as a consequence of smaller volumes through the manufacturing facilities,” the company said.
The group spent €4.1 million on research and development, which was broadly flat on 2022. However, it warned that it is expecting a decrease in R&D spend this year.
Mincon said measures were taken to protect margins in the “challenging market environment” through cutting costs, bringing some subcontracting back in-house, and through a redundancy programme.
It said this resulted in a net EBITDA saving of €3.1 million for the group in 2023. In addition its net debt position reduced by €6.4 million.
It added it would pay out a final dividend of 1.05c per ordinary share recommended, taking the total dividend for 2023 to 2.1c per ordinary share.
Mincon chief executive Joseph Purcell said it had been “a challenging year” for the company in terms of revenue, profitability, and return on capital employed. Revenue in the second half was lower than expected due to a number of factors, notably a slower than expected recovery in mining revenues as customers ran down their inventories, he said.
Another factor was the “continuation of more muted conditions in exploration drilling, while we also experienced delays to anticipated commencements on some construction projects during the period”.
“The team has worked hard to position the group against this tough market backdrop and there are some positives to note in respect of our year-end cash and net debt position and the continued good results we have seen from our inventory-reduction project,” he added.
Looking ahead Mincon warned the subdued market environment in the second half of last year has continued into 2024, but the company insisted it has begun to see some improvement in its order book. “We are working hard to improve our competitiveness and input costs which, together with potential improvement in the market environment, gives us more confidence around performance in the second half of this year,” it said.
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