Industrial supplies conglomerate Torre has undertaken a dramatic management shake-up — probably in a bid to restore the market’s faith in the company’s longer-term growth prospects.
Torre, which was built up rapidly via acquisitions from the old SA French listing, has seen a dramatic about-turn in market sentiment after the dire economic environment stalled earnings growth.
The share has lost almost 65% of its value in little over a year. This is considerably more than its peers, such as Hudaco and Invicta.
The board changes see CEO Charles Pettit — largely credited with rebuilding the left-for-dead SA French into a credible and well-diversified industrial hub — step aside as CEO to take up a newly created position as executive deputy chairman.
Pettit will remain in charge of executing growth strategies at Torre; he also remains CEO of investment company Stellar Capital Partners, the largest shareholder in Torre. Stellar has pitched a mandatory offer to Torre shareholders, which could secure a stake of as much as 51% (depending on acceptances).
FD Roy Midlane resigned as CFO with immediate effect, but will provide consulting and advisory services to Torre.
Johan Botes, currently COO, becomes CEO, and group financial manager Shivan Mansingh steps into the role of CFO.
Botes is a former director of Eqstra Mining Services; he was later a senior general manager of the Barloworld Equipment division. Mansingh has worked for mining giant Exxaro and auditing firm PwC.
Vunani Securities small- to mid-cap analyst Anthony Clark says it had become apparent in recent months that Pettit wanted to hand the reins to a more operationally experienced individual.
He believes Pettit’s new role of executive deputy chairman echoes that of Arnold Goldstone at Invicta — another industrial supplies conglomerate. Goldstone took up the executive deputy chairman role after serving a stint as CEO.
"Both Goldstone and Pettit are focused on strategy and deals. It’s an area where Pettit seems happier," says Clark.
He notes, though, that the departure of veteran Midlane — who has also served executive stints with Set Point, Metrofile and House of Busby — raised eyebrows.
"I wonder if the moves were allied to getting some ‘recovery’ into Torre?"
Torre’s updated trading statement, covering the year to end June, pencilled in earnings between 5.2c/share and 6.2c/share. This is between 78% and 81% lower against earnings of 28c/share reported in the corresponding period last year.
Headline earnings are expected to come in between 16.5c/share and 19.5c/share — between 36% and 45% lower compared with 30.26c/share reported in the 2015 financial year. Normalised earnings, after the adjustment for restructuring and start-up expenses, are expected to be between 20.5c/share and 22.5c/share.