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- Metair Investments increased annual revenue 14% to R15.9 billion as it focused on internal controls and customers to turn nonperforming units around.
- Increasing production volumes of original equipment manufacturers and the recovery of its operations following floods in South Africa helped double revenue at its automotive components division.
- Geopolitical tensions, high inflation in Türkiye and other economic pressures dampened automotive battery sales, however. Metair must now find customers to replace its former Russian customers.
- For more financial news, go to the News24 Business front page.
Focusing on what is within its control helped Metair Investments, an automotive components manufacturer, turn an annual R4 million loss into a R129 million profit for the year ended December.
Shares in the JSE-listed manufacturer of suspension springs, brake pads, shock absorbers, radiators and air conditioners rose as much as 6.5% to R13.47 in early trade on Wednesday, valuing the group at R2.7 billion. Metair stock has dropped more than 40% over the past year.
The group said its automotive components business doubled revenue by increasing production volumes of original equipment manufacturers of passenger vehicles and light commercial vehicles in South Africa by a fifth. Metair also recovered its components operations after last year’s floods in KwaZulu-Natal.
Metair said it collaborated with Hesto Harnesses' major customer and technology partner to turn the business around and stem the first half's losses. These efforts increased Hesto's revenues by 222% to R5.7 billion, turning the first half's R711 million loss to R104 million operating profit in the second half. Hesto produces wiring harnesses and instrument clusters for cars at its factory north of Durban.
Metair also exports batteries from operations in South Africa, Türkiye and Romania, and sells energy storage solutions to industries in the telecommunications, utilities, mines and retail sectors.
These make Metair an important player in South Africa's automotive manufacturing and assembly sector, which employs about 500 000 people.
READ | Metair rockets almost a quarter as it flags a return to profit
Metair, which employs about 17 000 people, will present debt restructuring options to its board during May, said Paul O'Flaherty, ITS chief executive officer, in an interview. "The debt is at record, too high for Metair. We need to restructure the debt and make it fit our profile." The board's decision on the mechanics will be made public around June.
In Türkiye, where Metair owns the Mutlu Aku battery manufacturing operation, the company needs to find a replacement for the Russian automotive manufacturers whose patronage it has lost due to the European Union sanctions against that country as a result of its war on Ukraine.
"We have to find alternative customers for the approximately 1 million batteries we used to sell to Russia," said O'Flaherty, adding:
Finding customers would help increase the firm's capacity utilisation from its current 70%. Metair's export volumes from Mutlu dropped 69% last year compared to the year earlier.
In addition to over-capacity, the group's Turkish operations have to contend with hyper-inflation and very high interest rates.
"We need to solve for Mutlu and all the environment in which we operate there," said O'Flaherty. "The first thing is to ensure management is able to do what it needs to do. It must manufacture batteries at full capacity and sell them." Then the group can make a decision about the business.
"Selling (it) may very well be another option," said O'Flaherty.
Geopolitical tensions, high inflation in Türkiye and other economic pressures dampened automotive battery sales, with total volumes declining 17% to 7.3 million units.
Group revenue rose 14% to R15.9 billion, boosted by a 48% increase in sales from its core businesses, which contributed R7.8 billion to group revenue and R567 million to operating profit.
Headline earnings per share, meanwhile, improved to 135 cents from a loss of 17 cents in 2022.
Group net debt, meanwhile, rose to R2.8 billion as Metair executed extensive capital expansion in Türkiye.
"By focusing on what was within our control and what would make the most impact for our business, our leadership teams successfully navigated numerous challenges to deliver an improved performance," said Metair's CEO Paul O’Flaherty.
He added there is further work to be done for the group to realise its full potential and that management remains focused on unlocking avenues to generate further value.
Capital expenditure totalled R690 million to support future growth and efficiency improvements. The group announced it will spend R910 million on capital investments this year.
*This article has been updated with Metair CEO's comments on Türkiye and Russia.
