Master Drilling reported a 22% rise in headline earnings, as record revenue offset impairment losses related to its mobile tunnel-boring equipment, property and plant.
This marks the second year running in which the Gauteng-based mining solutions provider reported record revenue, with an increase of 11.5% to $270.8m (R4.95bn) in the year to end-December.
In its results statement released on Tuesday, the group attributed its gains to significant capex investment over the past decade, with 77% of last year’s $42.3m capital spend dedicated to expansion, while the rest went towards sustaining its existing fleet.
While $13m in impairments pulled operating profit down 12.6% from the previous year, the stronger operational performance saw headline earnings per share (HEPS) climb to 324.5c, up 22% year on year.
Master Drilling declared a dividend of R65c per share, compared to 52.5c in 2023.
“This accomplishment comes amid a backdrop of global market and economic uncertainty," said CEO Danie Pretorius. While profitability faced some pressure, the group’s commitment to capital discipline continued to deliver positive returns, he said.
Business Day reported in August that an impairment loss of $7.8m was recognised on the group’s mobile tunnel borer. Group CFO André van Deventer said the machinery, which Master Drilling developed with an Italian company, had completed two projects with miners Northam and Anglo American to test the equipment.
But the company lacked a contract for the equipment and future cash generation from the asset is uncertain, so it adopted a conservative stance and chose to impair it.
Additionally, a downturn in the market led to Master Drilling’s operations in North and Central America not using the shaft reverse circulation equipment, it said. The group thus made provisions for impairment losses on the equipment while it attempted to sell it in other markets.
It said it had strategically reallocated resources across North America, including machinery redeployment and personnel adjustments.
In contrast to the situation in North and Central America, Master Drilling forecasts significant growth potential within South America’s mining sector. The region was poised for substantial expansion, it said, and expansion into new market segments including open pit mining was already under way.
Africa, a key market for growth, is the other key focus area, with further expansion in Southern Africa expected late this year.
The group’s SA operations were a key driver of its operational performance last year, thanks to an expanded service and project portfolio in the country.
Master Drilling said its performance in SA “achieved exceptional financial growth in 2024, significantly surpassing projected revenue targets and demonstrating a strong upward trajectory anticipated to continue into 2025”.
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