Clare mining equipment manufacturer Mincon sees revenues slump
The company's mining revenue dropped 15%, with the biggest contraction seen in the Europe and Middle East region.
Clare-based mining tools manufacturer Mincon Group has posted a decline in revenues following a “challenging” start to the year, the company has said,
According to the company’s half-year results, it generated €80.6m in revenue during the first six months of the year — a 5.3% drop compared to the €85.1m generated during the same period in 2022. The company’s after tax profit for this period came to just under €4.9m — down from €6.5m.
The company's mining revenue dropped 15% during this time, with the biggest contraction seen in the Europe and Middle East region which is down 72% compared to the same period last year.
The company has received fewer orders from one large customer in this region as it seeks to reduce its own inventory.
It also cited currency exchange headwinds which represented 3% of the reduction in reported revenue, most notably due to the South African rand weakening between April and June.
Mincon Group chief executive Joe Purcell said the decline in the mining sector is down to several factors including reduced exploration activity and certain larger customers taking advantage of improved freight conditions to reduce inventories.
In total, 43% of its revenue comes from the mining sector, with 38% coming from the construction sector and 18% coming from the waterwell/geothermal sector.
The company’s mining revenue in Africa contracted by 11%, however, this has mostly been driven by the weakening in the South African rand. Mining in the Asia-Pacific region also contracted in the period, with revenue down 22%.
Its revenue from the construction industry was flat during the period.
“As a result of the lower mining revenues, we have looked closely at our costs and have taken selective, targeted action to reduce costs where appropriate,” Mr Purcell said.
The company said it expected to see revenue growth in the second half of this year as it implements its cost-reduction programme. It is also seeking to reduce its inventory during the course of the year.
As a result of its plans to reduce its inventory, the company has decreased its manufacturing output this year, which has impacted its margins.
“Our manufacturing plants are not fully utilising their capacity and manufacturing overheads are spread across less factory output, thus impacting our consolidated gross margin,” the company said.
While employee costs for the year so far are flat, it has still reduced headcount in administration and sales. The total costs of employees leaving between January and June was €700,000.
Mr Purcell added the company was “confident” its focus on efficiencies would ensure it could grow in the longer term.
Mincon Group said the focus for the rest of the year was winning smaller projects as they can provide the company with a steadier income stream and reduced complexity in controlling working capital.
