Irish engineering firm Mincon experienced a significant drop in profits last year, nearly by 50%, as the disruptions in the mining sector affected its financial inflows. The company, listed on the Dublin exchange and known for its expertise in creating, selling, and maintaining rock-drilling equipment and related products, announced its full-year fiscal results on Monday for the period ending 31st December 2023.
The profit produced by the group stood at €7.5 million for the year, showing a decline from €14.7 million reported in the previous year. The company’s total income was €156.9 million, signifying an 8 per cent drop compared to 2022. According to the company, fluctuations in currency exchange rates contributed to 5 per cent of the reduction.
There was a 16 per cent decrease in revenue from the mining sector due to contraction across the company’s operations in all its mining regions. This was partially caused by clients adjusting their stock after disruptions caused by the Covid pandemic. While the company’s construction revenue experienced 2 per cent mushrooming on a steady currency base, documented revenues witnessed a 2 per cent decrease.
Earnings before Interest, Taxes, Depreciation and Amortisation (EBITDA) of €21.1 million surpassed the company’s expectations but still indicated a 23 per cent decrease from 2022. This decline in earnings resulted from lesser revenues and decreased profit margins due to the reduced production in the manufacturing facilities.
Investments in R&D during the year matched the spending from 2022 at €4.1 million. However, Mincom cautioned about an expected decrease in R&D investments for the ensuing year. Despite the challenging market conditions, the company took measures such as cost-cutting, insourcing some subcontracted work, and started a redundancy plan to safeguard its profit margins. These measures resulted in an EBITDA saving of €3.1 million for Mincon in 2023, simultaneously lowering its net debt status by €6.4 million.
The company plans to distribute a final dividend of 1.05c per regular share, making the sum total dividend for the year 2023, 2.1c per regular share. Joseph Purcell, Mincon’s chief executive, admitted to having faced a challenging year in terms of revenue, profitability and return on capital employed.
In the latter half, earnings didn’t meet projections due to several influences. A recovery in mining revenues that was less swift than anticipated, as customers depleted their stocks, was a significant factor. Furthermore, a sustained slump in exploration drilling conditions and postponements to the planned start of a number of construction works during this period also contributed.
To counter this challenging market scenario, the team has been diligent. There are certain noteworthy points concerning our year-end cash situation, the net debt standing, and the consistent favourable outcomes from our project to decrease inventory.
Mincon cautioned that the lacklustre market conditions from the last half of the previous year have persisted into 2024. However, it assured that the business has started to notice an improvement in its order records.
“We are making earnest attempts to enhance our competition advantage and control input expenses. This combined with the possible market improvement instils more faith in our performance for the second half of this year,” the company stated.
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