Ex­pand on its plat­form

Finweek English Edition - - INVESTMENT -

Hav­ing em­barked on a fairly ag­gres­sive ac­qui­si­tion spree since be­ing listed in 2012 – which cul­mi­nated in the ac­qui­si­tion of Con­trol In­stru­ments ear­lier this year – Torre now aims to ex­pand its West African plat­form and con­tinue to add bolt-on ac­qui­si­tions to its op­er­a­tions in South Africa.

Some very as­tute in­vestors have been pay­ing at­ten­tion. The share reg­is­ter, be­sides boast­ing some large in­sti­tu­tions like Mo­men­tum and In­vestec, in­cludes the likes of Chris Seabrooke (Sab­vest), Eric El­ler­ine and Ti­tan Share Deal­ers (Christo Wiese). The busi­ness is 25% owned by man­age­ment and found­ing share­hold­ers.

CEO Charles Pet­tit says that they have as­pired to build an In­victa-type in­dus­trial con­sum­ables and com­po­nents busi­ness, struc­tured into three di­vi­sions. The Plant and Equip­ment di­vi­sion con­tains the old SA French, now in­creas­ingly di­ver­si­fied and re­branded as ‘Torre Heavy Lift­ing’. Man­hand is a ma­te­ri­als han­dling busi­ness that is fo­cused on cost ef­fec­tive fork­lift and ware­hous­ing equip­ment (and in­cludes the old Fork­tech busi­ness), and Kanu Equip­ment, the Bell and Lieb­herr Equip­ment dealer (among oth­ers) for West and Cen­tral Africa.

The Ser­vices and Sup­plies di­vi­sion stocks in­ven­tory in­clud­ing parts and con­sum­ables, and in­cludes the do­main of the com­pany’s first ac­qui­si­tion TGS. TGS sells af­ter­mar­ket re­pair and wear parts for Cater­pil­lar-type earth­mov­ing equip­ment. This di­vi­sion also in­cludes Con­trol In­stru­ments, which has been re­named Torre Au­to­mo­tive. “We have in­stalled a new man­age­ment team, re­freshed some of the brands and the op­por­tu­nity now for us is to in­te­grate the busi­ness into our African foot­print,” said Pet­tit. Torre is cur­rently in a closed pe­riod as it pre­pares f inan­cials for the f ull year to end June, and Con­trol In­stru­ments will only be in­cluded for two months of this pe­riod.

Cents

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Aug 2013

The Fi­nan­cial So­lu­tions di­vi­sion is a busi­ness en­abler for the com­pany’s two other op­er­at­ing di­vi­sions. “This is a pure or­ganic strat­egy,” says Pet­tit. “We wanted to struc­ture leas­ing and fi­nanc­ing op­tions for equip­ment pur­chases in Africa, but our cus­tomers can’t get the fi­nance they re­quire in those ge­ogra­phies. So this di­vi­sion will fa­cil­i­tate sales and the smooth func­tion­ing of the busi­ness.”

Smart ac­qui­si­tions are what have en­abled the com­pany to build scale, and most of them have been done pay­ing with cash. Pet­tit thinks this will con­tinue: “Once you have reached scale, bolt-on ac­qui­si­tions be­come very ac­cre­tive. We are small, so we are look­ing to do deals within our core area of com­pe­tence. We have pretty sub­stan­tial op­er­a­tions in West Africa, so we will prob­a­bly in­vest di­rectly into those businesses. The mar­kets we op­er­ate in South Africa are not very high growth, so to get earn­ings growth you need to do ac­qui­si­tions which will be an on­go­ing fea­ture of our busi­ness.”

The busi­ness has plans to grow or­gan­i­cally through adding more agencies to its of­fer­ing, and giv­ing com­peti­tors a run for their money. “Lots of our cus­tomers are strug­gling at the mo­ment, and in the af­ter-mar­ket I think there is an op­por­tu­nity to try and win mar­ket share by help­ing them trade through some of their work­ing cap­i­tal chal­lenges, so we are look­ing on the pos­i­tive side of the cur­rent en­vi­ron­ment.”

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