An improved balance sheet gives Torre Industries hope for the future

JSE-LISTED Torre Industries yesterday said it would utilise its improved balance sheet as a platform to diversify and strengthen the business despite a 30 percent drop in normalised headline earnings per share to 15 cents in the year ended June.

It attributed the slump to R456 million it incurred in impairments.

Torre executive deputy chairperson Jon Hillary said the group believed that it had the right management team in place and the balance sheet to deliver shareholder value through both organic and acquisitive growth in the future.

“A stronger balance sheet, an improved and better-integrated group and a clear strategic outlook provide Torre with a solid platform to benefit from any improvement in the economy or in the sectors it services. Torre is starting to see the benefits of the completed restructuring initiatives with an improved performance in the second half of the financial year,” Hillary said.

The group specialises in the supply of parts and components to the equipment and automotive sectors. It also provides specialised analytical and testing services to mining companies and commercial laboratories. The company operates in 11 countries.

Revenue stable The group’s operating profit increased 20 percent to R77m, up from the R64m of the corresponding period last year. It attributed the surge to improved cost control and operational efficiencies following significant restructuring costs incurred in the first half of the financial year. The company’s revenue for the 12 months under review remained stable at R1.5 billion, while its gross profit was up 8 percent to R568m.

Torre said that it declared a final dividend of 3c per share. It has been on a huge restructuring exercise, disposing of non core assets and acquiring strategic assets. In April, it acquired the business assets of Transformer Chemistry Services for R17m and took full control of Top Class Automotive Proprietary for R1 in May.

Top Glass contributed R11m of revenue to the group results and R1m to the group operating profit for the period May to June. The company also disposed of its remaining 55 percent interest in the Kanu Group for a total purchase consideration of $27.5m (R358m) during the period. Torre said it had received $13.5m of the total purchase consideration in cash and $1.1m shares repurchased, with the remaining amount to be received by June next year.

Hillary said the group anticipated stable or improved earnings in the coming financial year through organic and acquisitive growth.

“Trading conditions remain challenging, but having completed its restructuring, Torre is well positioned to benefit from any improvement in the economy or in the sectors it services,” Hillary said.

“Although the once-off impairment of assets has reduced the on-balance sheet capital, it is now soundly based on productive assets.”

Torre shares rose 0.79 percent on the JSE yesterday to close at R1.27.