ENGINEERING: Metlite Showing Its Mettle
Recent Western Cape Business News
THE Cape Town based Metlite Alloys group is making a major impact at listed metals trading company Insimbi Refractory and Alloy Supplies.
In Insimbi’s latest annual report CEO Pieter Schutte raved about Metlite’s contribution: “Our acquisition in 2010 of the Metlite Alloys group has proven to be a success and this operation has added real value to our revenues, profits and value proposition in the year under review and all signs are that it will continue to do so.”
Basically the Metlite acquisition enhanced Insimbi’s operational abilities and underlined a commitment to the aluminium market.
Metlite has been in operation for more than two decades and its core business is manufacturing various high quality aluminium alloys - including aluminium alloy ingot and aluminium de-oxidant.
The company is mainly a second tier supplier to local and international automotive component manufacturers as well as the local steel and related industries.
While one of the main reasons for the acquisition was to provide cost efficiencies and synergies in production and transport for Insimbi into its Western Cape customer base, it seems the influence of Metlite is reaching beyond the regional borders.
One might even be able to argue that Insimbi - which is a sizeable business with annual turnover of over R800 million - is taking a leaf out of Metlite’s operational manual.
In outlining plans to re-commission the company’s secondary aluminium smelter in Johannesburg (which was mothballed in 2010), Schutte noted: “The business has been restructured to emulate our Metlite operations in Cape Town whose business model has proven to be very successful.”
This is high praise for a niche business, and one has to ponder whether Insimbi were not fortunate to bag an absolute bargain in forking out just R11 million for what appears to be an extremely vibrant company.
Indeed, Insimbi’s annual report did disclose that the fair value of the assets and liabilities acquired amounted to almost R17 million and that a gain of R5.79 million was recognised from the bargain purchase.
While Insimbi’s annual report does not detail the profit performance of Metlite, a note in the report does show that between the date of acquisition (September 2010) and end February 2011 the business contributed revenue of R54.4 million and a profit before taxation of R3.8 million.
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