13th Aug 2018 12:11
LONDON (Alliance News) - Mincon Group PLC on Monday said profit grew in the first half of 2018 as it saw higher demand for its manufactured products.
The engineering company said pretax profit increased by 24% in the six months to the end of June to EUR7.8 million from EUR6.3 million reported a year earlier, as revenue rose 19% to EUR55.7 million from EUR47.0 million.
The result was driven by a 35% rise in Mincon product sales, which generated income of EUR47.4 million compared to EUR35.2 million a year prior. However, this was partly offset by a decline in the sale of third party products, which fell year-on-year to EUR8.3 million from EUR11.8 million.
"We are on a path to remove third party sales from our line-up where that makes commercial sense, to either manufacture them in our own plants, or discontinue the sales," said Chief Executive Officer Joe Purcell.
"The gross margin percentage on manufactured products is higher and is a more significant driver of our earnings," added Purcell.
The operating profit margin rose to 16.5% during the period from 14.5% a year before, excluding the acquisition of drill pipes supplier Driconeq AB. Mincon bought the Sweden-based company in March for SEK81.0 million, or EUR7.8 million.
Driconeq delivered a gross profit margin of 25.2%, while the pre-acquisition group achieved a gross profit margin of 41.8%.
Looking ahead, the company said it intends to combine Driconeq with its Viqing unit, which is currently a part of Mincon Nordic OY. Those businesses make the same products in the same town and the management teams and factories are, through agreement, in the process of amicable consolidation.
"The potential impacts from trade wars, tariffs and the UK leaving the EU are business uncertainties, but at present we are considering those impacts to be neutral," said Purcell.
"Our goal is not revenue growth for its own sake, but sustainable earnings growth, and niche manufacturing to develop defendable intellectual property that underwrites our margins over time," added Purcell.
The company recommended a 1.05 cent interim dividend.
Shares in Mincon were trading 5.3% higher on Monday at 150.00 pence per share.
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