Master Drilling expects to perform well in the new financial year due to its long-term contracts, diversified footprint, proactive capital management and service orientation, CEO Danie Pretorius said at the release of their annual results yesterday.
"Master Drilling … had a stellar year in 2022. Revenue is up 32% to $226.4 million (R4 billion) and cash generated was $25m. This is on the back of higher utilisation and investment in new business ventures,” he said in a statement.
The group delivers drilling technologies and mining solutions through partner relationships with blue-chip and mid-tier clients in the mining, hydro-electric energy, civil, engineering, as well as construction sectors, worldwide.
Its share price was steady at R14 yesterday, this after rising steadily from R6.70 three years ago.
Earnings a share increased 19% to 232.5 cents for the year to December 31, while the dividend was raised 46% to 47.5c per share versus 32.5c a year before. The group also has a healthy order of $265.4m.
“In the short- to medium term, the sales pipeline is expected to stabilise and increase with further tactical acquisitions and joint ventures supporting performance,” said Pretorius.
The dividend represented a five times earnings cover, which was in line with the desired level indicated in the group’s 2012 listing prospectus, of a four to five times earnings cover.
Pretorius said in a statement that the fleet utilisation was now moving towards the required benchmark of 75%. Capital management remained a priority. Diversification across regions, commodities, currencies and industries would remain a key part of Master Drilling’s strategy.
Opportunities to diversify outside of the traditional drilling business into areas such as artificial intelligence would continue to be pursued. There was also an evolving and enhanced contribution to all matters relating to ESG, he said.
“Our 2023 focus will be on building a sustainable, diversified and scalable business through organic and acquisitive growth as well as formal partnerships and alliances,” the group said.
“Analysts are referring to a ‘super-cycle’ in the mining industry that is being driven by the energy transition. We will, however, ensure we remain responsible and focus on our cost control, capital allocation and operational excellence," said Pretorius.
Globally, Master Drilling's profitable operations through the year demonstrating the benefits of “significant capex investment over the past 10 years”.
South America delivered a strong performance despite several political headwinds for miners in the region.
The market for raise boring and exploration drilling activities in North America was buoyant in 2022.
Africa remained the key area for the group, and opportunities in this market were being pursued aggressively.
In Scandinavia, Master Drilling Europe stabilised well and showed decent returns. The Indian operations were performing well, in line with expectations. Growth in Australia looked promising.
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