Downfall in Profits Drops Mincon Stocks

Published Date : Aug 21, 2014

Mincon - Clare-based mining equipment company’s share fell as its short-term results disappointed investors all around the world yesterday. The company is paying €7m for a 65pc stake in a Canadian firm and nearly €1m in two other businesses. Mincon exhibited a fall in its revenue of 15pc to €23.4m in the first six months of the year. Its operating profit slumped 37pc to €5.1m. As compared to its direct sales which were at €18.9m (7pc lower), the third-party products by Mincon fell 38pc to €4.5m.

Kevin Barry put allegations for the fall in revenue in the global mining industry. The downfall in the global exploration and mining market was affected due to the decline in the cost of precious metals. This was a feature in 2013. However, impacts were continued in the drilling products market in 2014, especially in link to the third party product, added Kevin.

Certain depreciations of key currencies in which the group trades also impacted the firm. According to Mr. Barry, the 7pc fall was due to the weakening of the currencies in the Australian Dollar and South Africa Rand, whereas, the fall in the third-party demand was because of economic slowdown in the exploration and mining market, especially in the EMEA region. The impact on the company in the first half of the year was €2m. Nearly, 75pc group revenues are non-euro denominated. 

Nevertheless, Mr. Barry is confident that the company’s revenue will improve in the second half of the year as the weakness in the global market will abate due to the addition of new drill rig agencies in Southern Africa. 

Mincon showed invoice sales of 14pc in the second quarter as compared to 2013. The company floated on the stock market having a capitalization of €197m. However, yesterday it was valued at €159m. 

Mincon’s agreement to pay the amount to the Canadian firm Rotacan comes with an option to obtain the rest of the 35pc in five years\' time. Mincon has also agreed to pay an amount worth €600,000 for a 65pc stake in Australia-based ABC Products, as well as €300,000 for a 60pc in Omina Supplies, Namibia-based firm.