Torre suffers through torrid half
Industrial conglomerate Torre took strain in the six months to end-December 2016 and looks set to face more tricky trading conditions in the second half.
Torre CEO Johan Botes said the focus would be on organic growth and increasing market share, while continuing to reduce costs.
The company recently exited its African operations, selling its 55% shareholding in Kanu Equipment for $27.2m.
The interim numbers showed revenue from continuing operations dropped 7% to R802m, with analytical services showing a marked fall in sales. But interim revenue did grow 7% on the second half of the year to end-December 2015.
Normalised profit before interest and tax from continued operations slid 35% to R65m.
Botes said there was some evidence of positive outlooks from Torre’s customer base. But he conceded that sustainability of the commodity recovery remained uncertain.
He said cost-cutting initiatives had been implemented and should start bearing fruit over the next 12 to 24 months.
A strategic review by the board should be completed at the end of March. Botes said the review would confirm Torre’s strategy to decrease its reliance on capital equipment and focus on southern Africa. It would also align costs with the weak economic environment and evaluate bolt-on acquisitions.
Vunani Securities analyst Anthony Clark said profit was at the lower end of guidance. “The fact that much of the profits was taken up by restructuring costs suggests some acquisitions have not fulfilled expectations.”
Clark believed another buyout offer from investment company Stellar Capital Partners — the largest shareholder in Torre — could be on the cards.
Charles Pettit, Torre executive deputy chairman and CEO of Stellar, reiterated that Torre was a strategically important asset in the Stellar portfolio.
“The strategic board review will further calibrate the future strategy and we are confident in the management team and the long-term prospects.”