Aug 22, 2016 Metair, AutomotiveComponents, Parts, Aftermarket
Metair, a leading international manufacturer, distributor and retailer of energy storage solutions and automotive components, announced last week its interim results for the six months to 30 June 2016 in line with expectation and guidance. Both Mutlu Akü in Turkey and Rombat in Romania performed well contributing to an improvement in operating profit for the Energy Storage Vertical. The South African aftermarket business environment experienced some margin pressure and local market competition whilst automotive export margins were reduced to compensate for the currency effect and to maintain brand presence. Mutlu Akü resumed exports to Russia during the period following some geo-political stability. Group revenue rose 13,7% to R4 billion driven by a higher revenue contribution from the Energy Storage Vertical, which benefited from a weaker ZAR and a 7% increase in overall automotive volumes. The Automotive Component Vertical revenue was largely flat due to lower production volumes being offset by price increases to recover higher imported vehicle material cost. This division saw a decline in operating profit, which was severely affected by the new model change. Complexities associated with the new model launch impacted efficiencies and required substantial investment in new technology which lowered operating profit to R260 million. HEPS was accordingly lower at 54 cents for the period. The group ended the period in a strong cash position with R259 million in cash generated from operations. Theo Loock, Metair’s Managing Director commented: “We guided that it would be a particularly difficult first half due to the business renewal phase in the Automotive Components Vertical. Our total customer support focus unfortunately put the Automotive Components Vertical in a small loss for the period. In spite of this, the group remained profitable thanks to the positive contribution from the Energy Storage Vertical. Importantly, we have secured future business from our major OEM customer base and we are less dependent on the traditionally cyclical automotive components business as our strategic redesign process has resulted in a much more balanced portfolio.” Further strategic progress was made through the acquisition of a 25% shareholding in Associated Battery Manufacturers Limited (ABM) Kenya, East Africa’s largest battery and solar power manufacturer operating in the aftermarket space. ABM expands Metair’s renewable energy offering and provides access to growth markets including an alternative supply route to North Africa and the Middle East. “A key highlight for this period is the award of a multi-year supply agreement from Daimler AG in Germany. This is a significant achievement that will see a substantial portion of our excess battery production capacity being absorbed.” Whilst the Automotive Components business has renewed most of the business associated with new model launches, the major challenges locally relate to production volume and margin outlook for newly secured business. Another key contributing factor to the performance in the South African market will be labour stability as Metair’s existing wage agreement expires in this period.
Loock, the chief executive of Metair, that the group expected a strike before a new wage agreement was secured by the National Union of Metalworkers of SA(Numsa) and the Retail Motor Industry Organisation (RMI). But Loock said the strike was expected to be “of an acceptable and normalised duration” and not the “extreme level” of negotiations in the past. The company has also confirmed it has been awarded a multi-year global supply agreement by Daimler in Germany for the company’s start/stop batteries.
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