STEENBERG-based corporate financier and investment bank AfraAsia’s efforts to build an industrial services hub at Torre Industrial Holdings looks set to pay off.
AfraAsia holds a 37,31% stake in Torre, which has now been considerably revamped as a sturdy base on which to build a scalable group that provides a diverse range of capital equipment and engineering solutions.
A number of observers have inevitably drawn comparisons between Torre and Invicta Holdings, a highly profitable industrial products supplier based in Cape Town. Admittedly Torre is but a sliver compared to the sprawling Invicta, but if Torre can be half as successful as Invicta was in bundling together cash generative acquisitions, then the newcomer will be on a high growth road.
It’s already been an interesting restructuring map for AfraAsia and Torre to follow in the last 18 months - including settlement agreements with major suppliers, restructured asset backed finance arrangements with major South African banks, the settlement of key creditors and rights issues to provide fresh capital.
The key development for Torre, though, was the broadening of its traditional focus on crane hire by acquiring Cape Town-based forklift hire specialist Forktech and Tractor and Grader Spares (TAGS.)
In the year to end June Torre’s revenue climbed to R82m (last year: R52m) with gross profit up to R42m (last year R25m.) Net income was only R5m, but the results only included one month’s contribution from recently acquired TAGS. In a presentation, Torre reminded that a full year’s contribution from TAGS would have a material effect on the numbers in the new financial year. Last year TAGS recorded R126m in turnover and R14,5m in net profit after tax.
Torre CEO Charles Pettit stressed the company’s aftermarket spare parts segment was more defensive in nature and less exposed to the economic cycle.
“Coming off a low base, earnings will be materially driven by TAGS and by new acquisitions in the coming periods, although organic growth and margin improvement will be a key focus for management.”
Pettit said management were targeting at least two bolt-on acquisitions in the 2014 financial year to grow Torre’s product offering and distribution reach at TAGS and Forktech. The company, he said, was also looking for a deal in the industrial consumable segment.
By Jenni McCann