Master Drilling's chief executive Danie Pretorius said: “No one can run away from the challenging operating environment, but we can look for ways to mitigate this and other risks. 
Photo: Supplied
Master Drilling's chief executive Danie Pretorius said: “No one can run away from the challenging operating environment, but we can look for ways to mitigate this and other risks. Photo: Supplied

Master Drilling looks to futher diversification

By Edward West Time of article published Mar 25, 2020

Share this article:

CAPE TOWN - Master Drilling Group has a pipeline of $297 million (R17m) of construction, engineering and mining drilling work and is looking towards further diversification to beat adverse market conditions and an uncertain global macro environment.

Master Drilling's share price increased by 50 percent yesterday afternoon to R7.50 on the JSE, after its annual results were released yesterday.

Revenue increased 6.9 percent to $148.3m in the year to December 31, but operating profit fell by 5.1 percent to $22.4m, due to adverse market conditions and an uncertain macro operating environment.

Headline earnings per share in dollars decreased 3.7 percent to 10.3 cents, while in rand it increased by 4.9 percent to 148.8 cents for the year.

The dividend for 2019 was passed to preserve cash resources in the volatile market conditions.

Chief executive Danie Pretorius said: “No one can run away from the challenging operating environment, but we can look for ways to mitigate this and other risks. One way to do this is through diversification, which has always been a part of our strategy.”

The global spread of Covid-19 was testing operations in many sectors, including mining, where working remotely was a  challenge for the industry as a whole.

Master Drilling was in close communication with clients to assist them taking appropriate measures to mitigate the spread of the virus on all sites, said Pretorius.

“In 2019 we explored opportunities to expand into new markets and for acquisitions that will integrate well into our value chain and provide increased revenue and profits,” he said.
The development and testing of new machines also continued in 2019. The commissioning of the Mobile Tunnel Borer started as did the first phase of commissioning of the shaft boring system.

“These innovative systems will yield benefits for the business in coming years”, said Pretorius.

He said the past year had been characterised by volatile markets, including in the commodity, currency and equity markets. Despite this, a stable order book of $142.1m was maintained, said chief financial officer Andre van Deventer.

The earlier Bergteamet acquisition  progressed well, giving Master Drilling access to markets in Scandinavia and the rest of Europe.
Recently, the Competition Commission approved the acquisition of Geoserve Exploration Drilling, a private company specialising in exploration and drilling services.

“The transaction will augment our expertise and global reach, as well as provide a platform for horizontal integration in the mining industry, which has been under pressure in the past few years, necessitating consolidation”, said Pretorius.

Geoserve had an established pipeline that would reinforce Master Drilling's capacity and income profile through increased exploration drilling, reverse circulation drilling, geo-technical investigations and grade control drilling services, which were all key to the broader mining sector.

Various opportunities in first world countries such as Australia, Canada and US were coming to fruition and were expected to increase the group footprint in the world in the near future.

BUSINESS REPORT 

Share this article:

Related Articles