Metair bullish on automotive sector

After a leadership overhaul, recently, Metair says it is well positioned to profit from a projected huge rise in automotive industry output in SA.

Metair, which recently underwent a leadership overhaul, is projecting huge growth in production in the automotive industry in SA, which it says it is well positioned to profit from.

The group, an automotivecomponents manufacturer and battery maker, said on Thursday that the outlook for production volumes in SA is promising.

The group said its customers’ increasing capacity will reset country vehicle production at a new benchmark of between 650,000 and 700,000 units, 30%-40% higher than the current levels of about 500,000.

Metair’s market share is also growing on the back of increased localisation, and significant additional revenue has been secured for Ford business.

“Management interventions to curb the effects of short-term operational pressures are in place and ongoing investments are expected to deliver returns in line with Metair’s targets over the life of the contracts,” outgoing CEO Riaz Haffejee said, announcing the group’s results for the 2022 financial year.

“We expect new model and facelift launches to drive meaningful growth over the medium to long term, most notably the ongoing contract into Ford’s investment into the SA automotive industry.”

Haffejee’s surprise resignation two years into the job was announced last week. He was replaced on an interim basis by the group’s CFO Sjoerd Douwenga.

Metair manages an international portfolio of 15 companies based in Turkey, SA, Romania, Kenya and the UK. The group’s 2022 results showed it endured a torrid year as it went from a profit to a loss because of multiple challenges, including the floods in KwaZulu-Natal, global supply chain disruptions and raw material shortages.

The profit of the company, valued at R4.46bn on the JSE, cratered from a profit of R692.8m to a loss of R3.9m in its year to end-December.

“These results are reflective of a number of extraordinary external impacts, which occurred at a time when we are investing heavily for future growth,” Douwenga said.

“Our teams did well to maintain supply to our customers and deliver on our strategic priorities, navigating global supply chain disruptions and raw material shortages, lost production due to the effects of KwaZuluNatal’s floods on our major customers, inflationary cost pressures and higher energy costs,” he said.

The group assembles, distributes and sells energy storage products and automotive components in Africa, Europe, Turkey, the Middle East and Russia.

The automotive-components segments were affected in SA by a loss of production for one of its major customers, Toyota SA, after its Prospecton plant south of Durban was damaged during the floods in April and production suspended for several weeks. It recovered to pre-flood levels only in the fourth quarter of 2022.

Metair generates just more than half of its revenue in SA (52.5%), followed by Turkey (35.3%) and Romania (12.2%).

The devastating earthquake in Turkey in February, which claimed the lives of thousands of people, did not affect any of Metair’s facilities and no staff were injured.

However, the group said in its outlook that “some dealers have been affected and the potential impact to the aftermarket business is currently being assessed”.

The group was also hit by hyperinflation in Turkey, where it has operations through battery maker Mutlu Akü.

Headline earnings per share, a common profit measure in SA that excludes certain items, went from 354c to a headline loss of 17c.

The group said in September it is considering splitting its energy-storage and automotive components businesses.

Metair did not declare a dividend.