- Revenue increased 9.4% to R11.2 billion
- EBITDA improved by 4.6% to R1.4 billion
- HEPS increased to 336 cents
- Cash generated from operations up 40% to R1.2 billion
- Dividend increase of 20% to 120 cents per share declared for the year
- Automotive Components performance supported by exports, continued expansion and deepening of localisation
- Energy Storage Vertical performance supported by strong local aftermarket volumes
- First lithium-ion battery cells produced in Romania
18 March 2020 – Metair, a leading international manufacturer, distributor and retailer of energy storage solutions and automotive components, today announced its results for the twelve months to 31 December 2019, reflecting a record performance for the Group.
Theo Loock, Metair’s Managing Director, commented: “The record performance Metair has delivered in a changing and challenging environment has proven the Group’s resilience on all fronts whilst we also made good progress to secure the foundation for future growth.
“Our lithium-ion production line in Romania delivered its first battery cells with official production set to begin in the second quarter of 2020. In the Automotive Components Vertical, each of our Group companies successfully secured major contracts arising from the new vehicle launches planned to service the export and local markets.”
Turnover from the Automotive Component Vertical increased by 11.3% to R5.6 billion on improved volumes, supported by exports and the continued expansion and deepening of localisation. Profit before interest and tax (PBIT) rose by 5.7% to R538 million. The adjustments made by OEM customers in reaction to market requirements, increased export allocations and a protracted wage negotiation period resulted in lower efficiencies and margins.
“We are pleased that the industry secured a three-year wage agreement during a critical growth and investment period for the local automotive industry. For example, Hesto Harnesses will supply the full spectrum of wire harnesses to a range of new customers. This could see Metair add some 3 200 employees with a capital investment of approximately R500 million, securing turnover of between R12 to R14 billion over the planned model life period of seven years,” said Loock.
The Energy Storage Vertical reported a growth in revenue of 7.4% to R6.9 billion, owing to an increase in volumes supported by a strong local aftermarket which contributed to an improved performance from First National Battery following increased management attention over the past few years. Profitability was impacted by subdued conditions in Romania, some difficult export contracts out of Turkey and lower industrial demand in South Africa.
“Although our Turkish business continues to face challenges relating to complex global political and trade conditions, Mutlu Akü produced another strong in-country performance, delivering a 26.3% increase in turnover and 5.7% increase in profitability on strong aftermarket demand,” added Loock.
The Automotive Components and Energy Storage verticals are at different stages in their growth cycles and require different strategic responses and support structures. Following the Board’s annual strategic review, and with the aim of unlocking value for shareholders in mind, the directors announced just before year end that a possible managed separation of the two business verticals is under investigation.
“We are excited about the opportunities available for both businesses and the Board believes that a managed separation of the two verticals could unlock significant value and should be investigated.
“Our lead acid battery business remains relevant and we are lithium-ion technology ready, meaning that we can capitalise on this opportunity. On the other hand, excellent automotive industrial policy clarity has built OEM confidence and led to record investment in South Africa. Metair is already a beneficiary of much of that investment, and we are well placed to continue supporting African exports and localisation requirements which will underpin our growth in coming years,” explained Loock.
Trading for the current financial year has been affected by a number of challenging external factors including a labour disruption at a major customer and market volume declines in new vehicle sales and exports which are affected by the breakout of COVID-19.
“Looking ahead our focus is on managing what is within our control in delivering against each vertical’s core strategies.
“The outbreak of COVID-19 will reshape the way business operates. Government and the private sector need to work together to develop response plans that allow industry to continue operating whilst safeguarding public health. Metair is in a position to adapt quickly and we have the infrastructure and resources available to keep our employees safe whilst helping to control the spread of the pandemic.
“The Automotive Components Vertical is entering an important investment phase, including greenfield facilities, to support the investments by OEMs that will drive our future growth and support South Africa. We believe that these planned investments will strengthen Metair’s position as the shift towards localisation accelerates in light of the inevitable structural global trade disruptions resulting from COVID-19,” 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