Operating profit falls 14pc at drilling equipment maker Mincon
Operating profit at drilling equipment maker Mincon has fallen 14pc to €6.9m in the six months to 30 June.
During the period the group reported moderate revenue growth of 8pc to €60m.
The increase in turnover was mainly driven by the full impact of its Driconeq acquisition in 2018, with Mincon seeing its market "softened" in the first half of this year, according to interim results from the group.
Meanwhile, earnings before interest, taxation, deprecation and amortisation for the half year period were €9.5m, around 20pc below the forecasts of analysts at Davy Stockbrokers.
Joe Purcell, CEO of Mincon, said: "The first half of 2019 marked a period where the production capacity of the group caught up with the order book of last year, but where the market has softened during the period."
"This has led to a build-up in inventory, a capacity coming on-stream in excess of current sales levels and an overhead level that requires growth to support it against the backdrop of a softening market."
"This has impacted on our gross margin, our operating margin and our momentum," he added.
Responding to the changing market conditions, the company has set a target of €3m in cost cutting.
The various cuts have been implemented in the first half of this year, and the benefits will come through in the second half of 2019 and beyond, Mincon said.
As part of the measures, the group has already reduced its headcount by around 10pc.
Originally founded in 1977 in Shannon, Mincon now has offices in 15 countries across five continents.
Earlier this year Mincon acquired Pacific Bit of Canada, a distribution company based in Vancouver.