Metair should weather currency storm

Business Report – Roy Cokayne

METAIR, the listed leading international manufacturer, distributor and retailer of energy storage solutions and automotive components, believes it would be able to weather the storm caused by the steep recent devaluation of the Turkish lira.

The group supplies batteries to all major original equipment manufacturers in South Africa, EU, Romania, Turkey and Russia through subsidiaries in Romania (Rombat), Turkey (Mutlu Aku) and South Africa (First National Batteries).

It was also confident the trade war between the US and China would not have a major impact on its businesses.

There are always dark clouds, but we always search for the silver lining,” said Metair chief executive Theo Loock yesterday.

Loock said Metair had always managed to find a solution to currency devaluation headwinds during the three and a half years it had been invested in Mutlu Aku.
He said in the six months to June this included increasing its exports from Turkey by 28 percent and its energy storage business, securing two strategic automotive after-market contracts that represented a potential 1.5 million units in additional annual export volumes.

He said currency weakness was not always a problem and could sometimes be a benefit, because it made the company more competitive internally against any imports.
Loock added that one of the reasons Metair’s financial performance was strong in the first half of its financial year was that it managed to localise the standby batteries for Vodafone and Turkcell, it became more competitive and developed a better product.

“The industrial battery growth in Turkey is one of the things that helped us in the first half. We’re also a small segmental player in commercial battery applications, especially in tractors and trucks. That will be a big focus point in the second half to expand our participation in that market. Its a very small percentage of the overall market in commercial at less than12 percent. But it will always be our target to increase that in line with our overall market participation in the high at 40 to 50 percent,” he said.

Loock said Europe was the major trading environment for Turkish vehicle exports, because of its location and few, if any, products were exported to the US. He said any trade war, unless it spilled over to Europe and Turkey, would have a lesser impact on Metair’s exports.

“In the after-market we have a non-discretionary product that is purely dependent on disposable income,” he said.

Shares in Metair rose 13.38 percent on the JSE yesterday to close at R15.93.