All round positive group performance delivers pleasing Interim Results

  • Revenue up 10% to R4.5bn
  • Operating profit 16% higher at R413m
  • HEPS increased 16% to 132 cents
  • Mutlu Akü’s increased industrial sales and exports support a 25,3% improvement in Rand reported operating profit
  • Automotive Components Vertical benefitted from efficiencies and volume growth, delivering a 31% increase in operating profit
  • 35% shareholding acquired in Prime Motors to accelerate Metair group’s production of lithium-ion batteries for the growing European market
  • Two strategic aftermarket supply contracts secured representing a potential 1.5 million units in additional annual export volumes

Metair, a leading international manufacturer, distributor and retailer of energy storage solutions and automotive components, today announced its results for the six months to 30 June 2018.

Group revenue increased 10% to R4,5 billion and operating profit grew 16% to R413 million with the group operating margin improving to 9.2% from 8.7%. Group earnings before interest, tax, depreciation and amortisation (EBITDA) increased 11% to R585,7 million and headline earnings per share (“HEPS”) grew 16% to 132 cents, outperforming the growth in revenue.

Theo Loock, Metair’s Managing Director, commented: “The Turkish Lira devalued on average 17% against the Rand. Operationally however, Mutlu increased local earnings by 51%”.

Efficiencies derived from production and labour stability coupled with volume growth owing to higher levels of exports and use of more local components saw the Automotive Components Vertical achieve a 12,5% rise in revenue to R2,2 billion and a pleasing 31% increase in profit before interest and tax (“PBIT”) to R261 million.

The Energy Storage Vertical, despite being negatively impacted by warmer winter conditions and foreign currency translations, managed to achieve a strong performance, increasing revenue by 8% to R2,66 billion and grew operating profit by 10% to R250 million.

Mutlu Akü (“Mutlu”), Metair’s Turkish battery business, increased its automotive battery exports by 28% and local industrial battery sales by 83%, which together with a specific focus on cost control saw the business accomplish an exceptional 25,3% improvement.

Rombat, Metair’s battery business in Romania also increased its exports, maintaining its performance.

FNB’s approach in the South African market to balance its continued support to all energy sector customers – OEM, mining, industrial, standby and retail, over the past three years was challenging as most of its customers in these sectors experienced difficult economic times. An increased focus on manufacturing and marketing efficiencies, whilst also investing in promoting the FNB brand and retail network, combined with customer focused improvement plans to increase localisation, sustained profitability. Pleasingly FNB delivered a marginal improvement in profits despite an R18 million extraordinary investment in its brand, OEM customers and retail network.

In February 2018, Metair acquired a 35% shareholding in Prime Motors which is being geared to be Metair’s incubator and research and development centre for lithium-ion battery development. Prime Motors, has since secured a state of the art lithium-ion coating and cell assembly manufacturing line that will be installed in Rombat’s facilities in Romania. Metair and Prime Motors are involved in several lithium-ion projects with original equipment manufacturers (OEM’s) that could spearhead Metair’s entrance into the lithium-ion market.

“We have already seen the benefit of technology transfer through the partnership with Prime Motors. Our Romanian battery business Rombat has in collaboration with Prime Motors converted its first full electric vehicle and Prime Motors has secured its first order for renewable standby batteries for solar applications,” commented Loock.

A key driver of Metair’s long-term sustainability and longevity in the automotive mobility space is its ability to follow the market, breathe with the market and to adjust timely to technology shifts. This requires local, international and global relevance.
Aligned to this, Metair announced the possible acquisition of Tovarna Akumulatorskih Baterij (“TAB”) in Slovenia in June this year. However, given the recent and ongoing volatility in emerging market currencies, especially in Turkey, the board has prioritised the continued focus on maintaining Mutlu’s good performance and therefore decided to terminate the due diligence process and negotiations in this regard.

Metair’s strategy to secure relevance will be paced in line with the external environment, operational conditions, earnings and shareholder value delivery.

“Management is focused intently on ensuring that Mutlu’s operational performance is sustained during the second half and that measures are taken to mitigate the impact of currency volatility,” concluded Loock.

 

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NOTES TO EDITORS

About Metair:

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.

Energy Storage
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
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.

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