- HEPS grew 21% to 160 cents per share
- EBITDA 19% higher at R699 million
- Operating profit up 21% to R499 million
- Revenue increased 19% to R5.3 billion
- Growth driven by volume uplift in both business verticals
- Continued good capital allocation delivers value uplift for shareholders
- First lithium-ion line investment in final stage of commissioning
14 August 2019 – 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 2019.
Group revenue increased 19% to R5.3 billion and operating profit grew 21% to R499 million with the group operating margin improving slightly to 9.3% from 9.2%. Group earnings before interest, tax, depreciation and amortisation (EBITDA) increased 19% to R699 million and headline earnings per share (“HEPS”) grew 21% to 160 cents.
Theo Loock, Metair’s Managing Director, commented, “These pleasing results reflect delivery against our strategic objectives at an operating level, where we were able to counter economic challenges through volumes and higher value component opportunities.
Both business verticals delivered real volume growth which supported the improved performance. In the energy storage vertical, Mutlu Akü achieved an 85% increase in exports while growing the aftermarket in a tough economy and maintaining OEM volumes in a declining market. First National Battery recovered as planned due to improved market and competitive positioning. The automotive components vertical benefitted from improved manufacturing volumes, customer diversification and a higher level of localisation.”
An all-round positive performance from the energy storage vertical saw turnover grow by 14% and operating profit rise by 16% on the back of an improvement in margins to 9.4%. Mutlu Akü’s focus on increasing export volumes offset the 16% devaluation in the Turkish Lira while Rombat in Romania managed to sustain its performance in a challenging European trading environment. First National Battery grew automotive volumes by 5% due to cost and pricing improvements and a successful rebranding which enhanced its product and retail positioning.
Despite a challenging January start-up by Original Equipment Manufacturer (OEM) customers in South Africa, followed by market and production volume level stabilisation issues, the automotive components vertical experienced an increased volume and value output trend. Turnover grew by 24% and operating profit increased by 16%, with margins ending slightly lower at 10.2%. Metair’s major OEM customer volumes rose 5%, mainly due to increased exports, with some of the increased volume output related to contingency plans for the renewal of wage agreements planned for the second half of 2019.
Looking ahead, the energy storage vertical historically performs better in the second half of the financial year due to the winter demand cycle for batteries in European and other export markets. This trend is expected to continue. Expanding growth opportunities in export markets is a key focus area for this vertical as devaluation of the Turkish Lira remains a challenge, despite recent improvements in Turkey’s geopolitical position and economic indicators.
The automotive components vertical is well-positioned to benefit from structural support and commitment in the industry to grow the manufacturing base in the medium-to long-term, as South African OEM customers plan to offset the softer vehicle demand trend in South Africa by potential growth in their export markets and model production expansion opportunity. In the short-term, production stability is dependent on the successful conclusion of the wage agreement renewal cycle.
Loock added, “Metair operates best in a stable and high-volume production environment. In such an environment, the second half performance stands to benefit from a sustained upward volume trend buoyed by higher local OEM production and export volumes in the automotive components vertical.”
Metair is progressing well in the review of its strategy aimed at securing, enhancing and growing shareholder and stakeholder value. The outcome of the review process is dependent on the medium-to long-term business outlook as influenced by industry trends, technology shifts, model launches and final volume allocations in its applied markets.
“In line with our commitment to prudent capital allocation and strategy to secure relevance, the Metair board has approved the commissioning of our first lithium-ion battery production line in Romania at the end of November. From a broader strategic review perspective, we plan to consult on and communicate the outcome of this review by year-end,” concluded Loock.
Instinctif Partners +27 (0)11 447 3030
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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