Control Instruments beds down acquisitions

Johannesburg, 20 Mar 2007

Control Instruments is on its way to meeting its strategic imperatives, says the JSE-listed automotive technology firm.

In its year-end results to end-December, it says it is "well on the way to achieving the strategic goals it set two years ago". This year, it is looking to bed down the R420 million in recently made acquisitions.

Revenue increased 95%, from R395 million to R772 million, which is indicative of the company's growth but not fully representative of recent acquisitions, it says. The company also presented "normalised" results, stripping out certain once-off accounting effects.

Control Instruments, trading under cautionary, says it hopes to make an announcement in May around its cautionary status.

Strategic changes

By 2004, it saw fundamental changes taking place in the industry it serves, says the firm. As a result, it implemented a strategy to increase the critical mass of each of its businesses, become a global player in its chosen niche markets, and increase the level of development expenditure.

"To achieve these objectives, Control Instruments made a number of acquisitions during 2005 and 2006. These acquisitions were identified at the start of the process."

Last year, it focused on maintaining momentum in each business unit. In the year ahead, the company will shift its focus to integrating these acquisitions and managing expenses.

Expansion

While it remains focused on targeting niche sectors of the worldwide automotive and transportation industries, the company says the acquisitions have "dramatically" changed the nature and size of the group. Apart from its South African offices, it now has operations in the UK, the US and Germany. By the end of last year, it employed 1 950 people, up from 570 two years ago.

The company's fleet management business performed well, with onboard computers (OBCs) being sold on every continent in over 43 countries. "Sales of OBCs increased 38%, to 31 500 units sold during 2006, with the largest increase coming from the international markets." The unit is expected to continue to show strong growth and is looking to expand internationally, says the company.

Control Instruments says the automotive aftermarket business has expanded and will continue to do so. "The acquisition of the business of Pi Technology will give the group a significant 'front end' into the specialised niche markets in the UK, Germany and the US," it says, with orders already coming in.

Its shares closed down yesterday at R5.60, a 20c drop. Its 12-month high is R6.25, while its 12-month low is R4.25.