JOHANNESBURG (miningweekly.com) – South Africa-based raisebore driller Master Drilling’s expansion into new markets, particularly its recent entry into India and Australia, should stand it in good stead to benefit from a global uptick in the commodity cycle.
The JSE-listed company in November announced its entry into the Indian and Australian markets and in February bought Swedish firm Bergteamet Raiseboring Europe, which it intends to use as a launchpad for further expansion in Europe.
In an interview with Mining Weekly Online on Tuesday, CEO Danie Pretorius said that the group lacked exposure in some of the countries where the world’s major mining companies operate.
“We are at an exposure rate of between 30% and 40% in doing business in some of these countries, which include India, Australia, the US, Asia and Canada,” he said, adding that Master Drilling would aim to increase its exposure in those regions.
Pretorius stated that a stronger global economy and an upswing in the commodity cycle had a positive impact on its order book, with committed orders of $124.7-million and a “healthy” pipeline of $228.1-million.
The strong order book should have a positive impact on the group’s revenue in the next reporting period.
In the 2017 financial year to December, Master Drilling’s revenue increased by 2.8% to $121.4-million, while operating profit decreased marginally to $24.8-million.
The firm’s South African rand earnings per share (EPS) decreased by 27.1% to 153c, while the US-dollar equivalent EPS decreased 19.6% to 11.5c. South African rand headline earnings per share (HEPS) decreased by 26.5% to 154.4c and the US-dollar HEPS decreased by 18.9% to 11.6c.
An impairment on the company’s South African black economic empowerment transaction had a negative effect of about $1-million.
An investment in further human capital to drive future growth in the business, lower utilisation rates and the exchange rate effect of emerging currencies had a negative impact on the company’s profit after tax, which fell from $22.32-million to $17.45-million.
Pretorius said in a statement that it was a positive result given that one of the group’s machine categories, the XX-large machines category, was used only 40%.
Meanwhile, he said that new management strategies and actions implemented in some challenging regions had turned most of the company’s underperforming businesses around.
As a result, the company expects an improvement in most global regions where it does business during the next reporting period.
Pretorius further noted to Mining Weekly Online that the company was “particularly proud” of the launch of its Mobile Tunnel Borer last month, which was set for delivery in September and commissioning in October this year.
This disruptive technology allows for continuous mining and requires no blasting, significantly enhancing mining efficiencies, he explained.
While Pretorius explained that there was a definitive shift in industry discussions regarding digitalisation, automation, innovation, a focus on carbon footprints, as well as on how to deal with global issues (such as the water crisis), he said that the company’s innovative advancement in its technology and proven, long-term industry experience, placed it in a strong position to continue to support its clients’ drive to improve productivity and efficiencies, while reducing operational costs.
The solutions and service provider aims to continue striking a balance between continued investment in capital projects to support its future growth, while enhancing shareholder returns through the distribution of dividends.
For the reporting period ended December 31, the Master Drilling board declared an annual gross dividend of 26c per share on March 19.