| Tru-Test Makes Investment in Australian
Agri-tech Icon Tru-Test Ltd has announced the purchase of the Rural Division of Sunbeam Ltd the corporation in Australia. This Division, which has revenues of around $20 million is the world leader in the manufacturing and marketing of wool harvesting machinery and equipment. Having been in the Australasian market for over 100 years the Sunbeam brand is an icon. Tru-Test is one of New Zealand's largest exporters. "Two of Tru-Test's business drivers are technology and distribution and this acquisition fits fairly and squarely with both. Sunbeam's products are world class and the organisation's distribution strength is beyond question. Tru-Test has had discussions with Sunbeam intermittently over the past 10 years and the benefits that will be achieved have always been apparent. Their quantum has become so significant that the timing of this market consolidation became compelling" says Tru-Test Managing Director Des Scott. This acquisition has marked a significant step for Tru-Test, New Zealand's largest agri-tech company as it seeks to increase its distribution network in Australasia. It also signals a continuation of the strong focus that Tru-Test maintains on the development of key markets and brands. The distribution network of Tru-Test's existing Australian subsidiary combined with Sunbeam will create that country's most far reaching and efficient agri-tech distribution system. It is fair to say that exporting outside of Australia has not been a major focus for Sunbeam in the past and Tru-Test will add significant value in this respect. Clearly there are also significant cost savings to be made as the two organisations are merged over the next few weeks. Tru-Test is a New Zealand based multinational with its 100% owned subsidiary network around the world. "In this respect we are unique in this industry", said Mr Scott. Tru-Test has subsidiaries in Australia, USA, Mexico and a joint venture in Brazil. Equally important to the success of Tru-Test is its strong commitment to research and development. "Managing creativity is an area in which Tru-Test excels," says Mr Scott. "The company has targeted specialised areas where creativity, hard work and an almost obsessive commitment to quality brings worthy rewards." Tru-Test and Sunbeam have shared a close relationship for many years. Tru-Test scales and Sunbeam shearing equipment have been sold side by side in the NZ market for over 17 years. Further association came with the acquisition of PEL Industries by Tru-Test earlier in the year as PEL fencing products have been distributed in Australia by Sunbeam for nearly 10 years. Sunbeam has contributed significantly to Tru-Test sales into the Australian market, and conversely, Tru-Test accounts for approximately 20% of Sunbeam shearing equipment sales in New Zealand. The international distribution subsidiary network owned by Tru-Test will ensure that Sunbeam products enjoy increased exposure to markets worldwide. Tru-Test's business strategy has been the catalyst for some exciting developments during the past twelve months. These developments and previous initiatives have translated into strong financial achievement. On a normalised basis Tru-Test has earned 35% and 38% EBIT return on capital employed over the last 2 years. Since 1987, Tru-Test has averaged 22% compounded growth in turnover and continues to enjoy annual increases of more than 20% in sales across its key markets. The acquisition will be funded with a mix of debt and equity. The form that a capital raising will take will be announced in due course. Over the years the Sunbeam range has been responsible for helping champion New Zealand shearers such as Rod Sutton and Dion Morrell establish world endurance records. The emphasis placed on quality control by Tru-Test will ensure that more records will fall to Supershear combs and cutters. Australasia is the worlds toughest market for shearing products and offers the opportunity for the company to develop and perfect products that can achieve strong success globally. Tru-Test will continue to enhance the position of its brand as an innovative New Zealand company on the world stage. For more information, please contact: Des Scott, Managing Director + 64 9 978 8888. |