Mincon stable, though Driconeq drags on some numbers

Irish engineering company Mincon Group updated the market on its trading in the calendar year to date on Friday, reporting a 22% improvement in revenue for the first nine months of the year.

The AIM-traded firm said the results incorporated the contribution from Driconeq, which ot acquired in March.

Mincon product sales increased 37%, of which Driconeq accounted for around 26% and the residual group growth was 11%, the board explained.

Third party product sales fell 26%.

Gross margins, excluding Driconeq, rose to 41% from 38.7%, while the gross margin slipped slightly to 38.3% when Driconeq was included.

Operating profit excluding Driconeq was up to 15.8% from 14.3%, or 14% when Driconeq was included.

Profit before tax excluding Driconeq was at 15.2%, rising from 13.1%, with the figure standing at 13.3% including Driconeq.

EBITDA excluding Driconeq improved to 19% from 17.6%, or fell slightly to 17.2% with the inclusion of Driconeq.

“Driconeq is a substantial acquisition with a low gross profit margin and a high material content, and unless separately commented on, distorts the understanding of the underlying margin performance of the rest of the group,” the Mincon board explained in its statement.

It said Mincon product, expressed as a percentage of total sales, continued to grow, from 76% to end the third quarter last year to 85% for the year-to-date in 2018 - and 86% in the third quarter alone.

“We have been driving a strategy where we manufacture and sell our own engineered products to give us superior control on our quality and distribution, and better margin where our engineering delivers advantage to our customers,” the board said.

“Exclusive of Driconeq, the change to Mincon manufactured products continues to deliver an improved gross margin, to 41% compared to 38.7% for the comparable group to last year, or 38.3% when Driconeq is included.”