Master Drilling develops new technology amid uncertainty


Master Drilling develops new technology amid uncertainty

Published Date: 2019-09-11 | Source: Stephen Gunnion | Author: Stephen Gunnion

Master Drilling develops new technology amid uncertainty

The drilling services specialist reported a decline in first-half dollar earnings as it battled a number of headwinds including a firmer rand.

Master Drilling says there's growing interest in its new drilling technology as global demand grows for its fleet of machines. It's receiving enquiries worldwide for new technology, particularly its new mobile tunnel borer, which is used in the horizontal and near horizontal development of mines, as well as its blind shaft borer.

The drilling services specialist says the commissioning of the mobile tunnel borer is already underway and drilling underground has started. The first phase of the shaft boring system is in the process of commissioning and will form part of a new shaft sinking system with the capability to sink shafts in hard rock conditions up to 11.5 metres in diameter and 2 kilometres in depth.

Despite the interest in its new technology, the group says continued global uncertainty and volatility has impacted its business performance. Releasing its interims results, it said global trade was in turmoil, impacting commodity markets and creating uncertainty around the future demand for and consumption of commodities. Still, at the end of the June, its committed order book sat at $198.6 million, just 2.5% below December's levels, with a pipeline of work worth $297.1 million

In South Africa, the group said business and consumer confidence remained constrained even after the expected outcome of May's elections, which resulted in delays on investment decisions. Although that affected its operating environment, it moved ahead with its technological development, the stabilisation of its global footprint and the exploration of new business opportunities, which most recently included Russia and Australia. As a result, it said the business remains stable and well positioned to benefit from an improvement in the global economic climate.

Revenue rose 3.8% to $70 million in the six months to end-June, boosted by last year's acquisition of raise boring specialist Atlantis Group. Operating profit fell 8.3% to $11.8 million due to the firmer rand and earnings per share (EPS) declined 14.3% to 5.4 US cents. In rand terms, EPS were down 1% to 76.7c and headline EPS rose 5.6% to 76.7c. It said it would consider a dividend at the end of its financial year.

Net cash generation decreased to $9.3 million due to the investments in working capital to cater for higher volumes of work coming onstream involving new projects across the group

It said it expected its operational and financial performance to improve in the second half of the year as some the headwinds it faced in the first six months subsided, including currency fluctuations and political developments. The improvement in the commodity cycle and weaker emerging market currencies would support firmer revenue and lower costs, it added.

Its shares closed unchanged at R11 yesterday.

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