Mincon, an Irish engineering tools group, has reported “positive signs of recovery” in construction revenues and “good progress” on processes to drive efficiency across the business following a difficult period for the company.
Revenues at the group sank 16 per cent to €16.8 million in the first six months of 2024 compared with the same period last year, it revealed in half-year financial results published in August.
Operating profit fell by almost 70 per cent to just €249,000 as the group’s business in the Americas plunged 29 per cent, while construction revenues in its Europe and Middle East region declined by 17 per cent compared with the same period last year.
The group, which makes and services rock-drilling tools for mining companies, on Friday provided a trading update for the period from January 1st to the end of September, and informed investors there had been a recovery in operations in its third quarter.
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The Dublin-headquartered business said the recovery in revenues and order books it witnessed at the end of its first half continued into the third quarter, which in particular reflected growth in its North American construction revenue.
It said improvement in the Europe, Middle East, and Africa construction and water well market has been “slower to materialise”, but that it was awarded its first two large construction contracts in the Asia-Pacific region.
“With mining revenue steady overall, we remain confident of earnings and revenue growth in the second half of 2024 compared to the first half,” it said.
“We have continued to make good progress in delivering initiatives to enhance our cost of production, thereby increasing our margins and our competitiveness.
“We are in the final stages of closing our carbide plant in Sheffield and have agreed outsourced arrangements to supply our bit plants on improved cost terms. We have also made further progress on reducing our inventory holding in the past quarter.”
In a note, Davy said its guidance for the group has been maintained, and that it does not envisage any changes to forecasts.
“Mincon has made good progress on a number of internal initiatives during the third quarter,” it said. “Inventory has been further reduced in the quarter after an already good performance since mid-2023.
“The Sheffield plant, which the business had announced would close, is in its final stages and improved cost terms have been secured to replace raw material supply from that facility through outsourcing.
“Additionally, key product development projects have made progress in the half to date.”
In terms of its stock price, Davy said there was “good value” to be had if the company is indeed past the trough in earnings at the start of the year. “Our price target remains at 73c, suggesting over 60 per cent upside from here,” it added.
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