How Master Drilling plans to deal with COVID-19 impact

Master Drilling, a global drilling solutions company, has seen some positive effects from emerging currency weakness due to its business generating US dollar revenues. The company's annual revenue increased by 6.9 per cent to $148.3 million. However, the CEO, Danie Pretorius, acknowledges the challenges posed by the COVID-19 pandemic and the looming economic shutdowns. Pretorius discussed the company's strategies to cope with the crisis and ensure business continuity. Pretorius mentioned that the business units in Africa outside of South Africa are operating normally, while there has been significant volatility in South Africa. In response to the interviewer's question about dealing with the shutdown and crisis the company faces, Pretorius emphasized adopting a 'wait and see' approach due to the uncertainty of the situation. He mentioned that although the Chinese business unit is back in operation, each region, including South America, North America, Africa, India, and Scandinavia, has unique challenges and responses to the pandemic. Pretorius highlighted the varying approaches taken by different regions to address the COVID-19 outbreak. When addressing the potential costs associated with the pandemic, Pretorius highlighted that around 60-70% of the total costs are related to salaries, indicating the need to monitor and manage this expense carefully. He also mentioned the importance of containing salary expenses to ensure financial stability in the coming months. Despite the challenges, Pretorius expressed optimism about managing costs effectively and maintaining operations amidst the crisis. Pretorius mentioned that the company has identified various levers to navigate through these difficult times. These levers include implementing leave options for employees, optimizing operational costs, and engaging with financial institutions to strengthen the balance sheet. By actively managing costs and ensuring financial stability, Master Drilling aims to weather the economic uncertainties caused by the pandemic. In response to the potential impact of mining industry shutdowns on the company's revenue, Pretorius acknowledged the risks but highlighted the diversified nature of the company's operations spanning across multiple countries and commodities. This diversification provides a degree of risk mitigation against the volatile market conditions. Regarding salary cuts, Pretorius mentioned that salaries represent a significant portion of the business costs, particularly in South Africa where 80% of the group's workforce is based. While salary adjustments may be considered in the short term, Pretorius emphasized the need to balance cost-cutting measures with maintaining a skilled workforce and ensuring business continuity. As the CEO of Master Drilling, Pretorius remains focused on implementing strategic measures to mitigate the impact of the pandemic on the company's operations and financial performance. By leveraging a combination of cost management initiatives, operational efficiencies, and financial prudence, Master Drilling aims to navigate through the challenging economic landscape brought about by COVID-19.