Superior service, technological innovation and market diversification remain core of strategy
20 March 2018 – Master Drilling Group Limited (Master Drilling, JSE: MDI) today released its Annual Results for the year ended 31 December 2017. Revenue increased 2.8% to USD121.4 million and operating profit decreased marginally to USD24.8 million. This was a positive result given that one of the Group’s machine categories, the XX-large machines category, was utilized only 40%. Cost of sales increased in line with the increase in revenue bringing about a flat gross profit percentage in USD terms.
Commenting on the Annual Results, Danie Pretorius, CEO of Master Drilling, said “Despite 2017 having been a challenging year with various political changes across the world and a tough local macroeconomic environment, we delivered stable operational results in 2017 with the continued focus on working capital bearing fruit in the form of satisfactory cash generation.
The uptick in the global economy and commodity cycle is expected to have a positive impact on our business going forward. Our pipeline is strong and we are excited about our entry into India and Australia, further diversifying our geographical exposure. The recent acquisition of Bergteamet Raiseboring Europe provides a launchpad for further expansion in Europe. There are many synergies between the two companies and this business complements our focus on providing innovative tailored technology solutions to our clients. “
The decision to invest further in human capital to drive future growth in the business, the lower utilisation rates and exchange rate effect of the emerging currencies had a negative impact on our profit after tax.
USD earnings per share (EPS) decreased 19.6% to 11.5 cents, and ZAR EPS decreased 27,1% to 153,1 cents. USD headline earnings per share (HEPS) decreased 18.9% to 11.6 cents, and ZAR HEPS decreased 26,5% to 154,4 cents.
“New management strategies and actions implemented in some challenging regions have turned most of our underperforming businesses around. As a result, we expect an improvement in most global regions where we do business during the next reporting period. We will continue to balance investments in technology and people that support growth with the need to drive efficiencies and productivity ratios across the group. This approach coupled with our diversification strategy across regions, commodities, currencies and industries will see our revenue and margins stabilise further,” added Pretorius
Whilst escalating cost pressures in the mining sector continue to be a challenge, Master Drilling remains well positioned to expand its service and product offering strategically into other industries as well as additional geographies because of continuous technological innovation.
“We are particularly proud of the launch of our Mobile Tunnel Borer in February 2018. This disruptive technology allows continuous mining and requires no blasting, significantly enhancing mining efficiencies. Because it is as advantageous at the capital stage of mining projects, with quicker deployment and access to the ore body, as it is at the production stage through substantial productivity increase when opening reserves or increasing a mine’s underground primary and secondary infrastructure, we believe this will open the doors to more opportunities in future.” said Pretorius.
Given the current macroeconomic environment in Sweden, it has been a disappointing year for the Scandinavian region, reporting results at breakeven point. Master Drilling strengthened its footprint in the region by exercising its call option to acquire the remaining 60% of the shares in Bergteamet Raiseboring Europe (“Bergteamet”) based in Scandanavia, which will assist the business in expanding its operations in the European markets and further diversify its geographic exposure. Bergteamet is highly specialised in raiseboring and conducts operations all over the world. The majority of its raiseboring customers are within the mining sector, hydropower projects and other infrastructure projects.
The Company continues to strike a balance between continued investment in capital projects to support its future growth and enhance shareholder returns through the distribution of dividends. For this reporting period, the Board has declared an annual gross dividend of ZAR26,0 cents per share on 19 March 2018.
“With the innovative advancement in our technology and proven, long-term industry experience, we are in a strong position to continue to support our clients’ drive to improve productivity and efficiencies whilst reducing operational costs,” concluded Pretorius.
Su-Marie Lemmer email@example.com +27 18 771 8100
Instinctif Partners (Media and Investor Relations)
Lizelle du Toit Lizelle.duToit@instinctif.com +27 82 465 1244
Keagile Makgoba firstname.lastname@example.org +27 82 325 9063
NOTES TO EDITORS
About Master Drilling
“We challenge the status quo to provide our clients with specialised, adaptive and integrated drilling solutions.”
Master Drilling was established in 1986 and listed on the Johannesburg Stock Exchange in 2012. The company delivers innovative drilling technologies and has built trusted partner relationships with blue-chip major and mid-tier companies in the mining, civil engineering and building construction sectors across various commodities worldwide.
The Master Drilling business model of providing drilling solutions to clients through tailor-made designs coupled with a flexible support and logistics chain makes it the preferred drilling partner throughout the lifecycle of projects from exploration to production and capital stages.