- Revenue up 16% to R8.95 billion (2015: R7.73 billion)
- HEPS of 229 cents (2015: 248 cps), decline limited to 8% despite challenges experienced
- Dividend of 70 cps declared for the period ending 31 December 2016
- Turkish and Romanian battery businesses experience record production output
- Automotive Components Vertical performance impacted by new model launch support costs during business renewal phase
- Multi-year contract for enhanced flooded start/stop batteries finalised with German Original Equipment Manufacturer (OEM)
- First lithium-ion Automotive and Industrial products produced
The group had planned for a particularly challenging year owing to new automobile model launches and the final settling down of overseas acquisitions as well as several geopolitical and security issues. In addition, a number of unexpected events outside of the company’s control impacted on the results, especially the political events in Turkey and the subsequent devaluation of the Turkish Lira at the end of the reporting period.
Theo Loock, Metair’s Managing Director commented: “In the context of an increasingly complex and fast evolving environment, we have produced a credible set of results. We expected a challenging year and put plans in place to address the challenges that were within our control.
“We also delivered a number of achievements during the year, including the award of a multi-year supply agreement for enhanced flooded start/stop batteries with a German OEM, the production of our first lithium ion automotive and industrial products and the acquisition of a 25% shareholding in Associated Battery Manufacturers Limited Kenya, East Africa’s largest battery and solar power manufacturer.
“In addition, the consolidation of knowledge across the group through the establishment of our central R&D centre in Turkey, has enabled us to effectively meet changing client demands and drive advances in technology.”
Both Mutlu Akü in Turkey and Rombat in Romania delivered a pleasing performance, having achieved record production output following excellent last quarter demand. This countered the impact of lower margins in the South African energy storage operations which saw intensified competition and some inefficiencies caused by a dedicated OEM production facility. The Energy Storage business contribution to group revenue increased 19% and now accounts for 59% of group revenue and 69% of operating profit.
The Automotive Component business achieved double digit full year turnover growth. The vertical’s contribution to revenue increased 14% to R4 143 billion and now accounts for 41% of group revenue and 31% of operating profit. This performance was supported by technology advancement, an overall weaker Rand and product and customer expansion.
Group revenue rose 16% to R8.95 billion, however, group operating profit lowered 7% to R731 million due to the costs and production inefficiencies associated with the new model launch and operation-specific challenges experienced at Hesto and First National Battery. Headline earnings therefore declined 7% to R453 million and HEPS ended 8% lower at 229 cents.
“Our efforts in addressing the challenges head on and ahead of time protected our performance. In particular, the second half saw record production volumes from our two international Energy Storage businesses and we were able to stabilise production volumes and increase manufacturing efficiencies in our Automotive Components business, ensuring an improved second half performance,” added Loock.
Looking forward, there has been a shift in the automotive component business to a lower production ceiling in 2017 and this vertical is expected to pose significantly increased complexity and variability. The company’s focused efforts on strengthening its ability to respond to the variable environments should stabilise the performance from this vertical.
The socio-political climate experienced in Turkey and failed military coup with continued geopolitical instability and related risks on Turkish Lira volatility will be a challenge. While the positive effect of the devaluation of the Turkish Lira is an increase in product offering competitiveness in the local and export market, the negative effect will only crystallise during 2017 if the Turkish Lira settles at lower levels, possibly reducing Mutlu Akü’s contribution to group earnings when converted into Rand.
“The next year will see us focus intently on strengthening our adaptability and flexibility to meet our customers’ requirements without compromising on financial sustainability. We will also focus on marketing efforts to address competition in the local energy storage business and drive higher profitability at FNB.
v “The successful execution of our strategy, efficiency improvements, possible and needed stabilisation of geopolitical conditions and the exchange rates as well as a peaceful labour environment are required for an improved financial performance in 2017, particularly since the disruption of the new vehicle launch phase is behind us,” concluded Loock.
Instinctif Partners 011 447 3030
Louise Fortuin 071 605 4294
Frederic Cornet 083 307 8286
Notes to Editors:
Metair Investments Ltd (Metair) is a publicly owned company listed on the Johannesburg Stock Exchange. The group is headquartered in Johannesburg and manages an international portfolio of companies that manufacture, distribute and retail products for its energy storage and automotive component verticals, exporting to approximately 46 countries.
The group’s operations manufacture, assemble, distribute and retail energy storage products and automotive components in Africa, Europe, Turkey, the Middle East and Russia.
The energy storage segment manufactures batteries for automotive, telecoms, utility, mining, retail and materials/products handling sectors. Automotive batteries are mainly supplied to the aftermarket through Metair’s unique aftermarket distribution channels and franchised retail networks, and are supplied to automotive original equipment manufacturers (OEMs).
Aftermarket products are also exported to approximately 46 destinations across Africa, Europe, the Middle East, Russia and Turkey. Non-automotive products are mainly sold into sub-Saharan Africa and Turkey.
Metair supplies batteries to all major OEMs in South Africa, Europe, Romania, Turkey and Russia through subsidiaries in Romania (Rombat), Turkey (Mutlu Akü) and South Africa (FNB). Key territories include Romania, Russia, South Africa, Turkey and Slovakia.
Automotive components include original equipment (OE) components used in the assembly of new vehicles by OEMs as well as spare parts and other products used in the automotive aftermarket. These include brake pads, shock absorbers, lights, radiators and air conditioners. The group also produces generic aftermarket products for use in the increasing number of imported vehicles.
For more information on Metair and the group’s subsidiaries please visit the website at: www.metair.co.za