DRILL CONSUMABLES
Consolidation in the drill consumables market continues, while new innovations are also increasing performance, reports Paul Moore
From the top down
Looking at the performance of Mincon PLC, a truly global drill consumables company where that is also its main business, gives a good insight into the market. Joe Purcell, Chief Executive Officer, commenting on Mincon’ s H1 2016 results, said:“ Revenue for H1 was 11 % ahead of last year at € 36.3 million, which tracked through to an improvement of 11 % in profit before tax to € 5 million( H1 2015 € 4.5 million), and a 12 % improvement in earnings per share.” On the market he states:“ We are seeing growth in the Americas and Australia, with only Africa retrenching in the first half. The instability of the South African rand, while relatively neutral in its effect on our accounts during the first half of the year, has caused significant caution and margin pressure in the South African market in the short term and has had a knock on effect to neighbouring African countries. We are investing in our factories to provide for the expansion of our product ranges, and new equipment is in the process of being commissioned in several of our manufacturing plants. We expect to begin to see sales growth from these products the 2017, with the rest of 2016 being used to test and complete designs,
and to develop marketing and sales plans.”
Over 50 % of Mincon revenue is derived from sales of DTH products and 77 % of turnover is manufactured in the Mincon factories.“ Within the product line-up we have seen some cyclical lows in, for example, Reverse Circulation( RC) products for the exploration market, but on the other hand, some products have begun to grow quickly as drilling techniques change and new uses are found for existing and newly developed products.” Mincon also says it has been considering how to best develop the Group, and has followed up on its analysis by beginning to establish regional hubs in Chile for South America and in Perth for Australasia. Ireland acts as the base for Europe.“ In setting up these regional hubs we can locate inventory for onward distribution and facilitate better informed and timely decision making. Combining this with standardised, more operationally oriented reporting metrics and systems, we should see benefits in the years to come. The Americas and Australia are the fastest growing markets for the Group.”
Since the majority of what Mincon sells is
Mincon-manufactured product, most of the inventory is either the raw materials that it uses or in its own products going through the factories as work in progress( WIP) or finished products
Over 50 % of Mincon revenue is derived from sales of DTH products and 77 % of turnover is manufactured in the Mincon factories
Atlas Copco Secoroc says its development engineers have looked at all aspects of drill bit technology to ensure the longest possible service life for Powerbit
located at its distribution points.“ Inventory reductions should be obtainable from redeploying our own inventory, and turning production over to back orders or tuning it down while we trade inventory down to target levels.”
The company said it had been active in approaching potential acquisition targets, but“ did not see value for the Group in the terms that were being sought by vendors, compared with the cost of investing in our own engineering competencies to build a competitive offering. We consider these opportunities on a case-by-case basis. Through the cycle we have seen Private Equity owned companies being withdrawn from sale and refinanced, and other companies seeking unrealistic prices even while their sales and profits fall. However, we are still committed to growing both organically and by acquisition. We prefer to control our own products and our own channels to market. We are seeing growth in our sales, which we believe is due to increased market share rather than a general improvement in our target markets. Having said that, there are improvements in some commodity prices and certain endmarkets appear to be beginning to return to growth. This should lead on to a recovery in the exploration businesses in due course and then across the mining sector. We believe that the underlying tone is improving, even if this is anecdotal rather than observable.”
Robit on the acquisition trail
Acquisitions played a key role of Robit PLC’ s first half-year 2016. The company made major acquisitions in both Australia and the UK. As a company Robit’ s operative profitability improved in the review period, even though its net sales declined slightly(-4%). The company’ s EBITDA % increased to 12 % to € 2.5 million( 10.7 % and € 2.3 million in H1 / 2015).
The company continued building its international sales network by establishing a sales office for Thailand, located in Bangkok.“ Through the acquisitions Robit PLC has advanced to a global player and it has four manufacturing plants: Finland, South Korea, Australia and England. Approximately two thirds of the company’ s personnel are located outside Finland.”
First off, Robit PLC acquired 100 % shares of Bulroc( UK) Ltd, a leading supplier in the business of big Down-the-Hole hammer and related accessories. The company is focusing on this product segment and is especially known for its product performance and quality. Bulroc( UK) Ltd is based in Chesterfield, England. In
46 International Mining | NOVEMBER 2016