The group of Mohamed Loukil returns to the Tunis Stock Exchange. Formerly listed before being privatized and split into two, the company of AMS (Ateliers Mécaniques du Sahel) has chosen to fund its restructuring through the Tunis Stock Exchange.
The objective of AMS is clear: to raise finance in order to recover and expand and it is not the first to do so. Long before it, the SOPAT of the poultry sector had done the same.
The company and its new shareholders have not looked back. Bassam Loukil is drawing new perspectives to his future shareholders, promising them market shares in Egypt and Africa and not only that.
Interview:
What could push an investor to invest in AMS, especially since you announce, at the outset, that there will be no distribution of dividends?
It should first be noted that AMS was even more indebted at the time of its privatization in 2007. Today, it is less indebted and has potential. The hardest part has indeed been done. A significant investment of nearly 12 million dinars was made by the group to renew all the production units of the company and reorganize its flows. The AMS works on a just-in-time basis and has potential. Very often, the company has been forced several times to operate two eight-hour shifts to cope with demand.
We do not announce dividend distribution, because our main aim through this IPO is to turn the business around. We can however say that the dividend is expected soon, given the high potential available to that company that will soon return to profit and distribute dividends.
We believe we should be transparent with everyone and we really are so and we are very confident that in 2014 – 2015 there would be distribution of dividends. Today we have over 50% growth in the company’s ratios. It remains that the production follows, that the third phase of social cleansing takes place within two months to rejuvenate the workforce, increase productivity and ensure better utilization of machines, especially the new machines that are equipped with digital systems requiring a minimum of computer knowledge and an intellectual level Bachelor + 5. That is why there has been a recruitment of 12 senior executives in 2009 and 2010, and we had to bail out the human resources of AMS.
Would this not risk burdening your charges even more and always leaving you in a cash deficit?
The results clearly show, however, that despite a cash deficit in 2011 and a missed first quarter, we sold well. We have even generated a net profit that has been improved with the balance of 2011 which was at 471 thousand dinars. For personnel expenses, we can say that the social rehabilitation, which took place in 2009, has not yet had the impact that might be feared, since it was amortized over three years. We paid 1.7 MTD to release in an amicable manner 15 people who did virtually nothing. The impact of this social rehabilitation measures that took place in 2009 will, in fact, be visible only in 2013 by what was amortized over 3 years. We’ll reduce more staff, with the release of 75 people, while increasing the turnover expected to rise this year by over 50%. This will reduce the payroll and finance charges, since the capital increase will, among other things, help reduce these costs.
Are they also tax reasons behind your IPO?
Purely fiscal yes, because we started to make profits, so we must think of the tax, a tax cut is always welcome in legality and full transparency. In entering the stock market, we also prepare the company to access capital market, bond loans and faster and more flexible capital increases.
We must have this flexibility and the responsiveness to take advantage of any opportunity that would arise tomorrow, either in Tunisia or elsewhere. We must not be fixed only to banks for future funding and we saw how banks had reacted and how fragile they were in 2011.
You say that one reason behind the IPO is to carry out a financial restructuring of the company, while already much of what you’ll raise on the Tunisian financial market, you will use to acquire 50% of Egyptian company Metalart?
Only 25% from this fund-raising on the stock exchange.
How will you proceed with the financial restructuring to reduce the debt ratio?
You have certainly noted that the level of stocks was very high at end of 2010. It was at the expense of cash. The reason is that we work just in time. We work in cycles, in fittings and stainless steel. During the last quarter of 2010, we increased stocks, to address the urgent needs of the local market and export in the first and second quarter of 2011 and make the lineup shorter. The waiting line to be delivered today by the AMS is on average three weeks on fittings and 4 to 6 weeks for stainless steel.
We have initiated important productions in the last quarter of 2010 to meet the needs of local and export markets especially in the first quarter of 2011. Fortunately or unfortunately, events that you know had occurred and we ended up with a very high level of stocks, without any counterpart. But if you see the results in 2011, especially in terms of sales, you will see how we could recover rapidly in market share, and that, thanks precisely to these stocks. In late 2011, the inventory levels returned to normal levels compared to the activity.
What about financial restructuring?
Part of this restructuring comes from the reduction of stocks by 6 million through the sale. Ten million will go to pay a portion for the remainder of the bond which was contracted by the AMS from the STB in 2003, from which remain only 1.8 MTD and the rest to reduce the level of property accounts. The reduction of stocks coupled with capital increase will inject immediate cash of 12 million dinars to the company and this will meet those needs broadly.
Can you give a date for the first distribution of dividends for your future shareholders?
Without too much exaggeration, I would say late 2014. We are in 2012, in 2013, I prefer to be realistic and close the third phase of upgrading and accordingly make the most of the company’s potential at its peak and begin distributing dividends, starting from 2014.
It is understood that you have recently signed contracts with the SNDP or “Agil.” Is this true?
This is a new product that we developed, last year, within 6 months in AMS. It involves fitting of gas cylinders. This product was previously a monopoly to a competitor. It was thus possible to conclude, in fact, two contracts. The first involves 500 thousand pieces and the second three hundred thousand pieces. We are also in African markets for the same product.
