Fochville-based Master Drilling provides drilling services to the mining, civil engineering and building construction sectors across 23 countries.“Although we had to let go 650 people in the business, we kept the core of our skills,” Pretorius said during the results presentation in which Mining Weekly participated.
Reporting half-year operating profit retraction of 37.7% to $7.3-million, Pretorius said the loss of a third of its labour was sad but that the company had to clamp down on fixed costs.
“That’s why today we are probably okay in terms of cash in the business,” Pretorius said.
Net cash generated from operating activities in the six months to June 30 increased 100% to $11.1-million amid the unprecedented Covid disruptions, when revenue decreased 17.9%, from $70-million for the corresponding previous period to $57.4-million in this half-year.
The group managed to limit the revenue decrease to 17.9%, from $70-million for the corresponding previous period to $57.4-million, while first-half operating profit retracted 37.7% to $7.3-million. But net cash from operating activities surged from $5.5-million to $11.1-million.
“Key in our business is to make sure that we drive utilisation and utilisation is a function of geographic expansion. From a business development point of view, the specific focus for us in the next short-medium term is to organically grow those areas where we’ve just entered,” Pretorius said, singling out Canada, where the company has three machines, Australia, where it has one machine, and Russia, where it has just been awarded its first contract. “The machine is on the water as we speak,” he added.
“We’ve just been awarded, earlier this year, our first real contract in Australia and we foresee that in the short-medium term we’ll be sending more machines to that part of the world. It’s a sustainable first-world country and I really believe a company of this size should be in Australia,” Pretorius said.
In response to analyst questions on the webcast, he said he expected Master Drilling to be profitable in 2021.
Looking forward, he listed several points as being “very important”.
The second is digitisation: “This is all of a sudden becoming a specific buzzword. We’re already doing some of that in-house.”
The third is sustainability: “The specific buzzword there is ESG – environment, social and governance.”
The fourth is for the company to relook at its own diversification: “We’re in 23 countries today but I think the time is probably coming where we need to diversify outside of the specific drilling industry. I’m not saying we should not be doing more business with our current mining clients, but I’d like to think there is some opportunity, given our skills levels and our DNA, to probably diversify more,” Pretorius said.