26th May 2015 08:17
LONDON (Alliance News) - Irish engineering group Mincon Group PLC on Tuesday said its revenue in the first quarter was boosted by acquisitions, as it takes steps to cut its cost base in the face of flat sales and weaker margins due to the tough conditions in commodity markets.
Mincon, which makes rock drilling tools and associated products, said its revenue in the first quarter to the end of March was up 40% year-on-year, with the rise effectively driven entirely by additional revenue from acquisitions made in the intervening period.
Excluding acquisitions, like-for-like revenue was flat in the quarter, though the group said the first three months are traditionally its quietest due to winter shutdowns in the Northern Hemisphere and summer vacations in the Southern Hemisphere.
Mincon said revenue from its manufactured products business, which accounts for 80% of group revenue, rose 2% on a like-for-like basis in the quarter, year-on-year, but this was offset by a 16% decline in sales of third-party traded products. The group added it made no rig sales in the quarter and said that while demand for rigs remains solid, the current market conditions for capital equipment sales remain challenging.
The company said its gross margin in the quarter dropped to 38% from 50% a year earlier, reflecting a less favourable product mix and due to acquisition costs but also hit by the significant fall in commodities prices over the past 18 months. Due to the pricing pressure which has hit the market, Mincon said it is planing to cut costs over the course of 2015 and expects its margins to improve in the second half.
Elsewhere, Mincon said it remains in talks with a number of potential acquisition targets.
Shares in the company were up 1.0% early Tuesday in London at 50.00 pence.
By Sam Unsted; [email protected]; @SamUAtAlliance
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