Metair delivers a robust h1’23 performance while navigating challenging trading conditions and investing in future growth and value creation

Group revenue increased 31% to R7.6 billion reflecting improved local original equipment manufacturer (“OEM”) volumes as a result of the recovery in sales to the Group’s key customer whose production was halted last year due to the KZN floods, while mass production and volume ramp up commenced for new customer vehicle models – most notably for FMCSA (“Ford”). Operating profit margins improved from 2.5% to 4.2%, with group operating profit increasing by R180 million to R324 million, owing to stronger SA OEM vehicle production and higher profitability from Mutlu Akü (“Mutlu”). Group EBITDA increased to R536 million and EBITDA margins improved to 7.0% from 5.6%. Higher interest rates experienced across the Group’s operating geographies and higher average debt levels to support customer expansion and elevated working capital investments saw finance charges increase 125% to R280 million for the period, bringing headline earnings per share down 9% to 41 cents.

The Automotive Components Vertical reported strong revenue growth, contributing R6.6 billion, a 147% increase compared to H1’22. OEM market production rose by 11% to around 293 000 vehicles, with the group’s major customers’ volumes showing a 21% improvement. The group successfully launched production for the Ford Ranger however, production at Hesto Harnesses (“Hesto”) was extremely challenging and complicated with significant design and engineering changes required post-production commencement. Hesto incurred an operating loss of R711 million due to this complexity which required higher than expected up-front costs, labour and line capacity as well as inventory, which Metair aims to correct and recover in line with commercial customer negotiations. Other subsidiaries with automotive operations performed well, generating operating profit of R264 million at a margin of 6.8%, slightly impacted by customer volume and mix variability. Overall, the excessive once-off airfreight and labour costs of R465 million incurred, resulted in an operating loss of R448 million for this business vertical.

Despite tough operating conditions with inflationary cost pressures and geo-political factors dampening local aftermarket and export sales, automotive battery volumes remained robust with the Energy Storage Vertical reporting 3.58 million in total unit sales, a 10% decline due to reduced export sales to Russia and the US which impacted hard currency earnings. The Energy Storage Vertical reported flat revenue of R3.74 billion, and generated operating profit of R121 million from an operating loss of R44 million a year earlier, at improved operating margins of 3.2%, up from -1.2%. This was largely due to Mutlu’s recovery from an operating loss of R160 million in H1’22 to a profit of R49 million in this reporting period.

Total Capex spend was R316 million for the period with majority focused on capacity expansion for the Automotive Components Vertical to invest in facilities, tooling and machinery required to support planned new model launches and facelifts, and technology enhancements in the Energy Storage Vertical to improve competitive positioning, efficiency and heavy-duty battery capacity. The new model and facelift launches are expected to drive meaningful growth over the medium to long term, most notably the ongoing contract to support Ford’s investment into the SA automotive industry.

Net working capital increased to R3.72 billion for various reasons, including an increase in safety stock levels to manage supply chain instability, higher raw materials on hand because of variability in customer orders, build-up of battery stocks in anticipation of the peak second half season and higher trade receivables following normalisation in automotive revenues. Cash utilised in operations amounted to R42 million and free cash flow consumed amounted to R384 million. Group net debt increased to R3.2 billion due to the higher working capital levels, debt funding on capital expenditure for new customer models and efficiency and expansion projects.

Anesh Jogia, CFO of Metair commented: “We are appreciative of the ongoing support received from our funders to date as we steer through this high investment and borrowing cycle. We remain focused on achieving effective cash management, cost control and capital expenditures as the business returns to normal production levels and the high net debt and working capital levels unwind into FY’24.”

Looking ahead, the Automotive Components Vertical continues to benefit from strong underlying operational performance with growth in OEM volumes anticipated in the coming years. Metair’s priority in the period ahead is to achieve efficient manufacturing of new models and facelifts and as OEM production volumes grow, the focus will be on effective project management, improving operating efficiencies and tight control of costs, working capital and debt. The Energy Storage Vertical continues to focus on improving volumes, securing new hard currency export markets, and expanding its traded industrial portfolio in SA. Metair continues to actively seek value creation opportunities within both business Verticals including the disposal of the Li-Ion line in Romania.

“I am excited about the prospects ahead as we manage the significant change to maximise opportunities on the horizon. We are resolute in our focus to enhance the strategic positioning of the group and the significant investments made today have laid solid foundations for value uplift in years to come,” concluded Sjoerd Douwenga, CEO of Metair.

                                                                                                                                                                                            ENDS

ENQUIRIES

Instinctif Partners        +27 (0)11 447 3030

Louise Fortuin               + 27 (0)71 605 4294

Bandile Nkambule         +27 (0)82 815 1812

NOTES TO EDITORS

About Metair:

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.

Automotive Components

Includes original equipment (OE) components used in the assembly of new vehicles, as well as spare parts and other products used in the South African automotive aftermarket. Products include brake pads, shock absorbers, lights, radiators and air-conditioners as well as generic aftermarket products for use in imported vehicles. Primary customers are the OEMs manufacturing new vehicles in South Africa as well as the local automotive aftermarket.

Energy Storage

Manufactures batteries for use in mobility applications and in the telecoms, utility, mining, retail and materials/products handling sectors. Automotive batteries are supplied to major automotive OEMs for installation in new vehicles and sold into the automotive aftermarket through a unique aftermarket distribution channel and franchised retail network.

For more information on Metair and the group’s subsidiaries please visit the website at: www.metair.co.za

• 35 000m² state-of-the-art new vehicle wiring harness manufacturing facility
• Part of Metair’s +R1.4 billion investment to supply Ford South Africa automotive component contracts
• Over 4000 new employment opportunities created and supported by global skills transfer
• Project delivers on South Africa’s Automotive Master Plan to 2035 priorities

Project delivers on South Africa’s Automotive Master Plan to 2035 priorities

13 September 2022 – Metair Investments Limited (“Metair” or “Group”) – a leading international manufacturer, distributor and retailer of energy storage solutions and automotive components – and its subsidiary, Hesto Harnesses (“Hesto”), are honoured to have His Excellency, President Cyril Ramaphosa officially launch the new Hesto manufacturing facility in KwaDukuza, KwaZulu-Natal today.

The new 35 000m² state-of-the-art Hesto facility is one of five capital investment projects which resulted in a commitment of over R1.4 billion by Metair to support the expansion and localisation of the new Ford Ranger (“The Ford Project”). Other subsidiaries involved in these projects include Unitrade 745, Automould, Lumotech and Supreme Springs, with a variety of wires, plastic and chrome plated parts, suspension parts as well as headlights and taillights being produced.

Riaz Haffejee, Chief Executive Officer of Metair commented: “This facility bears testament to the Group’s customer commitment and drive to support the sustainability of the automotive sector through enhanced localisation and global skills transfer. I am extremely proud of what the team at Hesto has achieved and extend our appreciation to our partners and other stakeholders, specifically Ford and Yazaki, for making this project possible.”

The investment commitment by Metair is an outcome of the South Africa Investment Conference held in 2020 and directly aligns with the objectives of the South African Automotive Master Plan to 2035 (“SAAM2035”), increasing localisation, developing skills and creating employment.

In partnership with Yazaki Corporation (“Yazaki”), Hesto employs world-class manufacturing skills and processes to produce wiring harnesses and instrument clusters for supply to South African based, automotive Original Equipment Manufacturers (“OEMs”), Toyota, Isuzu, Nissan, and recently added, Ford.

The new facility will produce wiring harnesses for the latest Ford Ranger and Isuzu models, which will be sold locally and abroad, and has created over 4000 employment opportunities in the region, more than doubling Hesto’s youthful staff complement which boasts 70% female representation.

William Hilditch, Managing Director of Hesto commented: “Hesto is the largest employer in the area and is proud to play its part in empowering the greater iLembe district community. The Government support to both Ford and Isuzu unlocked this opportunity for Hesto to grow its operations, both in KwaDukuza and Tshwane, and contribute significantly to employment, economic growth, skills development, and transformation. Our drive to increase localisation across our business has enhanced this impact. Our country has the resources and skills available to localise more and we believe that through closer collaboration across the value chain, there is much more that can be achieved on this front.”

Metair has driven several localisation projects in support of OEM’s and the SAAM2035 agenda through its South African-based subsidiaries. In conjunction with NAACAM, Metair is currently working on the localisation of copper, one of the core materials in the production of vehicle harnesses. This partnership with NAACAM has assisted Metair in identifying a local potential supplier. Another focus area is the localisation of polypropylene compounds, which are highly consumed materials within the Group subsidiaries. The breakthrough in the localisation of both these materials would not only translate to a more secure and stable supply chain but also contribute to job creation in South Africa. This is one of many projects that each of Metair’s South African-based subsidiaries are driving.

The Ford Project is expected to deliver on Metair’s return targets over the life of the contracts, driving meaningful growth for the Group over the medium-to long-term.

                                                                                                                                                                                            ENDS

ENQUIRIES

Instinctif Partners        +27 (0)11 447 3030

Louise Fortuin               + 27 (0)71 605 4294

Bandile Nkambule         +27 (0)82 815 1812

NOTES TO EDITORS

About Metair:

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.

Automotive Components

Includes original equipment (OE) components used in the assembly of new vehicles, as well as spare parts and other products used in the South African automotive aftermarket. Products include brake pads, shock absorbers, lights, radiators and air-conditioners as well as generic aftermarket products for use in imported vehicles. Primary customers are the OEMs manufacturing new vehicles in South Africa as well as the local automotive aftermarket.

Energy Storage

Manufactures batteries for use in mobility applications and in the telecoms, utility, mining, retail and materials/products handling sectors. Automotive batteries are supplied to major automotive OEMs for installation in new vehicles and sold into the automotive aftermarket through a unique aftermarket distribution channel and franchised retail network.

For more information on Metair and the group’s subsidiaries please visit the website at: www.metair.co.za

FY22 HALF-YEAR RESULTS SHOW A ROBUST PERFORMANCE AND STEADY PROGRESS WITH STRATEGIC PROJECTS FOR FUTURE RETURNS

• R1.7 billion Ford investment project progressing as planned with the recent launch of Hesto facility
• KZN flood business interruption well managed with R360m insurance claim progressing
• Significant non-cash impact of hyperinflation accounting for Mutlu Aku in Türkiye
• Normalised EBITDA of R743 million and normalised HEPS of 152 cents
• Robust management of balance sheet and liquidity

15 September 2022 – Metair, a leading international manufacturer, distributor, and retailer of automotive components and energy storage solutions, reported a resilient set of interim results for the six months ended 30 June 2022, despite a challenging and volatile trading environment.

Riaz Haffejee, CEO of Metair commented: “Our teams did well to overcome several obstacles during the first six months of 2022. Various measures were taken to responsibly manage the business and ensure continuity, especially in our investment projects which will support new vehicle model launches and secure attractive returns into the future. The results are unfortunately overshadowed by hyperinflation and certain once-off impacts whereas the underlying performance is a creditable outcome.”

The reporting period was characterised by reduced Original Equipment Manufacturer (OEM) production volumes in South Africa due to raw material shortages, supply chain delays and the KwaZulu-Natal (KZN) flooding, as well as sharp increases in energy costs in Europe owing to the conflict in Ukraine. Project costs incurred ahead of new vehicle model launches and a ten-day labour strike at Mutlu Akü (Mutlu), as well as the non-cash impact of hyperinflation accounting for Mutlu skewed the performance. This announcement provides normalised figures which exclude these impacts to provide a clearer indication of the underlying performance.

Group revenue was 2% lower at R5.8 billion while group operating profit decreased by R400 million to R144 million, at a reduced operating margin of 2.5%. On a normalised basis, operating profit is a healthy R557 million. EBITDA declined from R701 million to R300 million but is R743 million when normalised. Headline earnings per share dropped from 170 cents to 45 cents but on a normalised basis is 152 cents.

Automotive Components contributed R2.7 billion in revenue, following a 10% decline in OEM production volumes, while operating profit was R183 million with margins diluted by manufacturing inefficiencies, premium logistics costs as well as project costs incurred.

Due to the KZN flooding, the group’s major OEM customer, Toyota South Africa Manufacturing (“Toyota”), was forced to halt production at its Prospecton plant for several months in the second quarter, affecting turnover in the Automotive Components division. From the onset of the floods, Metair focused on assisting employees, customers, and other stakeholders as best as possible, while working with Toyota to support its recovery, and managing ongoing cash flow and liquidity needs across the group. Metair ensured a successful return to production including availability of materials to support the reopening of the Toyota plant which recommenced production in the third quarter. Production has climbed steadily since with the return to normal production volumes anticipated within the fourth quarter of the year. A business interruption insurance claim, estimated to total R360 million (before tax and minorities) is advancing, with R150 million in cash payments received to date and the total claim anticipated to be finalised in the second half.

The Group progressed its new vehicle model launch investment projects which remained within budget and on time. Project costs of R115 million were incurred ahead of new model launches, the most significant being the Ford Ranger, with production scheduled to commence in the fourth quarter of FY22.

Hesto Harnesses (“Hesto”) was the largest beneficiary of the R1.7 billion Ford Ranger investment with its new 35 000m2 wire harness facility officially opened earlier this week in KwaDukuza, bolstering employment in the region with 4000 new positions created. “The Group continues to deliver on customer commitments and is well aligned with the South African Automotive Master Plan to 2035, driving localisation, developing skills and creating employment,” added Haffejee.

The Energy Storage Vertical delivered a 14% improvement in turnover which increased to R3.7 billion, following a strong performance across all sales channels. The operating margin was -1.2% and the division recorded an operating loss of R44 million, reflecting the impact of hyperinflation accounting. Excluding hyperinflation, operating profit is R273 million, and the operating margin is 7.7%.

Internationally, inflation rates increased across all territories, mainly due to higher energy costs driven by the conflict in Ukraine. Mutlu experienced resilient market demand for lead-acid batteries in all sales channels, but sales volumes and profitability were impacted by a ten-day labour wage strike during June 2022. As inflation in Türkiye rose dramatically during the first half, hyperinflation accounting was applied to Mutlu for the period. Rombat’s sales were impacted by dampened consumer confidence given the conflict in Ukraine and the business’ performance was also brought down by a lag in energy cost recovery from customers. First National Battery’s volumes were marginally lower with efforts to improve competitiveness and market share progressing as planned.

Capital expenditure for the period, including Hesto and intangible assets was R454 million, with R67 million allocated to maintenance, R375 million to expansion capex and R12 million to health and safety, improving the group’s competitive position and efficiency. Majority was focused on capacity expansion for the Automotive Components Vertical to invest in facilities, tooling and machinery required to support planned new model launches and facelifts.

Net working capital increased by R820 million to R3 billion due to the impact of Toyota halting production as well as the strike at Mutlu and lead times for imported components which resulted in a build-up of stock. Cash and cash equivalents decreased to R588 million, while net debt increased to R2.4 billion due to the operational challenges experienced, additional funding taken up for new projections and advanced to Hesto, increased working capital investments and the impact of hyperinflation on Mutlu’s contribution.

“The period saw us prudently manage our balance sheet and liquidity to ensure we could deliver on our commitments, and we should see the debt and net working capital levels normalise in the second half. Our funders recognise the short-term nature of this position and have been supportive in discussions around the waiver of covenants which is expected to be implemented soon. We continue to closely monitor the group’s financial position and focus on effective cash management, considering customer requirements, planned investments and conclusion of the business interruption claims,” commented Sjoerd Douwenga, Metair’s CFO.

Commenting on the outlook for the year, Haffejee concluded: “We are intent on supporting successful launches of new models and facelifts with effective project management, improved operating efficiencies and working capital cost control being key focus areas as OEM production volumes grow. Our business has created a solid platform for growth and our teams are working hard at unlocking opportunities for further value creation as the environment recovers.”

ENDS

ENQUIRIES

Instinctif Partners

NOTES TO EDITORS

About Metair:
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.

Energy Storage
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 exported to approximately 46 destinations while non-automotive products are mainly sold into sub-Saharan Africa and Turkey.

Automotive Components
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. This segment 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

KEY GROWTH PROJECTS ON COURSE TO DRIVE SUSTAINABLE RETURNS

• Strategic recovery plan unfolded broadly as anticipated, supporting strong revenue growth
• Margins well-managed despite several manufacturing disruptions and extraordinary costs
• Record level of headline earnings per share achieved and dividend of 90 cents per share declared
• Well-positioned for future growth and returns with investment ramp-up progressing as planned. Short-and long-term value creation opportunities are being pursued
• Deepened commitment to sustainability and environmental stewardship

17 March 2022 – Metair, a leading international manufacturer, distributor and retailer of automotive components and energy storage solutions, today announced a robust annual financial performance for the year to December 2021.

Group revenue increased by 23% to R12.62 billion, reflecting a solid rebound following the lock-down restrictions in 2020. Group operating profit rose to R1.16 billion from R0.6 billion, with the operating margin at 9.2%, compared with 5.5% in 2020. The group achieved an 80% increase in EBITDA (including equity earnings and impairments) to R1.4 billion, and headline earnings per share more than doubled to 354 cents, the highest delivered to date. The board declared a dividend of 90 cents per share in line with Metair’s dividend policy.

Riaz Haffejee, CEO of Metair commented: “Steady progress against our strategic initiatives saw us deliver a record performance and continue to demonstrate our resilience in an environment that remains constrained by the effects of COVID-19. Energy Storage performed exceptionally well and ahead of our recovery plan, by capturing all round increases in market demand. The recovery in Automotive Components was more protracted with the strong growth in customer volumes in the first half not repeated in the second half, due to supply chain-related disruptions and other once off production interruptions. Our strategic projects including expansion works at Hesto are on track, enabling us to build out the capacity to support our current and future growth. OEM production is expected to grow with an increased focus on local production and I am confident that our ongoing investments will deliver returns and drive meaningful value creation over the short to long term.”

The Energy Storage vertical recorded an 18% increase in sales of automotive batteries to 8.8 million units with revenue of R7.6 billion showing the same level of increase. The volumes achieved beat 2019 (pre-Covid) levels, supported by strong aftermarket demand and exports from Mutlu Akü. EBIT rose by 51% to R887 million, with operating profit in local currency showing an improvement at First National Battery and more than doubling at Mutlu Akü. While operating margins increased from 9.2% to 11.7%, they were affected by a lag in recovery of high second half-energy costs. Sales of industrial batteries were consistent at R530 million with First National Battery continuing with its shift to a trade-focused model to counter the effect of technology, market and demand shift.

The Automotive Components vertical (including Hesto) contributed R6.7 billion in revenue, a 36% improvement compared to the 2020 reporting period. Operating profit increased from R88 million to R257 million, and the operating margin recovered from 1.8% to 3.8%. This was achieved despite manufacturing inefficiencies and premium logistics costs brought about by the global supply chain disruptions, and South Africa-specific production interruptions due to the steel industry strike and July civil unrest, as well as strategic project costs to support investment in future growth. As a result of supply chain disruptions and component shortages, including semi-conductor chips, South Africa’s OEM production ended the year at 503,000, reflecting a 21% improvement on 2020 levels but remaining well below 2019 levels and expectations.

etair employed a greater inventory holding strategy to mitigate shipping delays and freight costs, with net working capital increasing by 18% to R2.2 billion as a result. Cash and cash equivalents ended the period at R962 million, and net debt increased from R805 million to R1.3 billion, while net finance charges decreased to R145 million, owing to lower interest rates.

“We have financing facilities in place to support operations as well as our expansion programmes, and our strategic build-up of inventory will provide a buffer against ongoing supply chain challenges. We are focused on improving operating efficiencies and continue to drive effective project management as we proceed with our capex investments to support our growth plans and enhance our competitive position,” commented Sjoerd Douwenga, Metair’s CFO.

Capital expenditure (capex) including investment in intangible assets, totalled R575 million for the year, with a portion of the planned capex rolled over into 2022, due to the impact of global supply chain shortages and shipping delays. For 2022, just over R1 billion in capex has been allocated (including Hesto) for expansion, maintenance, and health and safety. Capex allocated for the Automotive Components vertical has increased, to invest in facilities, tooling and machinery required to support planned new business, new model launches and facelifts.

Metair is on a journey to deepen its commitment to sustainability and is investigating initiatives to enhance its environmental stewardship and secure the Group’s positioning in the future of green manufacturing. Measurement and reporting on ESG metrics are being refined, including setting formal key performance indicators and targets to drive improvement and sustain progress. These efforts are extended through Metair’s sponsorship of the Toyota Wessels Institute for Manufacturing Studies’ (TWIMS) Green Manufacturing chair which promotes executive expertise in this arena and actively combats climate change across Southern Africa. “During 2022, we will increase access to renewable energy by commencing with the roll out of solar power at our facilities, and we will be upgrading our factories to enhance working conditions and safety,” added Haffejee.

The trading environment will remain challenging during 2022 due to ongoing supply chain difficulties and semi-conductor shortages which are expected to be compounded by the Russia/Ukraine conflict. Metair is seeking alternative markets as OEM and battery sales into the EMEA region are likely to be impacted. The Automotive Component vertical will focus on resourcing to successfully support the launch of major new customer models in the second half, and on ensuring the highest quality, best cost, and on-time delivery for all customers. The volume outlook for the Energy Storage vertical remains positive given increased demand for absorbed glass matt batteries across all channels. First National Battery will complete the shift of its industrial battery business to a trading model, and the installation and commissioning of the lithium-ion manufacturing line will be a core project focus at Mutlu Akü.

ENQUIRIES

Instinctif Partners
Louise Fortuin + 27 (0)71 605 4294

NOTES TO EDITORS

About Metair:

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.

Energy Storage

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 exported to approximately 46 destinations while non-automotive products are mainly sold into sub-Saharan Africa and Turkey.

Automotive Components

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. This segment 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

STRATEGIC INVESTMENTS ON TRACK AND PAVING THE WAY FOR ATTRACTIVE RETURNS

• Progressive Covid-19 response strategy delivered a successful recovery
• Covid-19-related supply chain disruptions well managed
• Growth projects in both verticals progressing according to plan and budget
• Successful negotiation of RCF refinancing and Preference Share funding extension
• Positive outlook as growth investments ramp-up with the strategic review to be finalised end H2
• Green manufacturing strategy in focus to enhance environmental stewardship

19 August 2021 – Metair, a leading international manufacturer, distributor and retailer of automotive components and energy storage solutions, today announced a robust first half performance for the 2021 financial year owing to successful strategic execution and market recovery from the Covid-19 fallout.

Group revenue increased by 51% to R5.9 billion as operational activities recovered from the impact of the stringent lockdown measures in South Africa, Turkey and Europe in the first half of last year. Group operating profit rose to R545 million from an R18 million loss with the operating margin at 9.2%. The Group achieved EBITDA (including equity earnings but excluding impairments) of R701 million, up from R139 million in the prior comparative period and headline earnings per share of 170 cents, from a loss of 56 cents.

Riaz Haffejee, Metair’s CEO, commented: “Our teams have done an excellent job in executing our Covid-19 response strategy to ensure that our operations recovered to benefit from higher levels of demand, and that we continued to deliver on customer commitments by adapting effective strategies to manage the significant supply chain disruptions experienced during the period. Despite the dynamic and challenging conditions, I am pleased to report that our investment projects remained on track to support our future growth and value creation for stakeholders.”

The Automotive Components Vertical which is directly dependent on South African OEM production was positively impacted by model launches, facelifts and general market recovery, securing a U-shaped recovery. OEM production volumes increased by 54%, buoyed by higher export demand for locally produced vehicles, resulting in an 88% improvement in Group revenue contribution to R3.5 billion. Operating profit improved to R254 million from a R48 million loss. This was achieved despite manufacturing inefficiencies and premium logistics costs brought about by Covid-19-related supply chain disruptions globally, as well as strategic project costs for planned new model launches.

The Energy Storage Vertical achieved a 42% increase in automotive sales volumes to 3 961 000 units supported by continued strong local aftermarket, OEM and export demand experienced across regions. While Rombat and FNB delivered creditable results, the V-shaped recovery was largely driven by improved export volumes from Mutlu Akü which delivered an exceptional performance. The vertical contributed a 32% increase in revenue to R3.3 billion while operating profit rose from R74 million to R328 million.

Cash generated from operations improved by 24% to R273 million with net working capital utilisation higher at R458 million due to increased activity levels as well as management’s efforts to manage supply chain disruptions and availability of raw materials. Cash and cash equivalents ended the period at R1.1 billion. Net debt increased from R805 million to R1.2 billion, however net finance charges decreased 30% to R64 million due to a reduction in interest rates and lower average debt levels for the period. Unutilised and available finance facilities across the Group including foreign currency Rand equivalents totalled R2.4 billion at period end.

To support continued expansion, Metair has successfully negotiated the refinancing of R750 million in revolving credit facilities (“RCF”) maturing in August 2021 and a three-year extension to R840 million in Preference Shares funding maturing in December 2021.

“Cash preservation and liquidity management were carefully balanced during this intensive capital expansion phase and continue to be a key focus. With the successful refinancing and extension of our RCF and preference shares funding, we are in a strong financial position to ramp-up capital investment in the second half which together with increased project costs will have a short-term impact on our margins but deliver substantial longer-term benefits” commented Sjoerd Douwenga, Metair’s CFO.

A total of R1.6 billion in capital expenditure (“capex”) (including Hesto Harnesses) has been approved for the financial year in support of new project launches in Automotive Components and AGM technology in Energy Storage. R392 million was spent in the first half, predominantly on expansion as well as on maintenance and health and safety, improving the group’s competitive position and efficiency. For the second half, capex will be focused on new business expansion for the Automotive Components Vertical in facilities, tooling and machinery.

The Automotive Components Vertical will enter a year of preparation and implementation as new projects are finalised and commissioned. Some of Metair’s subsidiaries enter a pre-production and prototype manufacturing phase for greenfield projects which will result in a slight shift in the normal replacement cycle and increased project costs ahead of model launches.

Metair is supporting its customers in their efforts to catch back lost production due to the civil unrest and widespread looting experienced in parts of South Africa in July and is relieved to report that the disruption to its operations was short-lived, with no physical damage to Metair properties and minimal stock losses experienced at third party sites. The manufacturing base has been stabilised and Metair is optimistic about the prospects for full year SA OEM production to return to pre-Covid-19 levels and to beat 2019 levels in 2022, subject to supply chain stability and successful project launches. Mutlu Akü and Rombat achieved record first half volumes and Metair expects the second half performance form Energy Storage to remain strong supported by the colder northern hemisphere weather.

“Looking ahead, our priority is on supporting flawless new model launches and facelifts and on expanding our automotive battery product range while maintaining the momentum gained in operating activity during the first half. We will continue to drive effective project management and improve operating efficiencies to maintain our current base while investing in the Group’s future.

“We are encouraged by the recovery experienced across both verticals together with the growth opportunities ahead in the Automotive Components Vertical and look forward to refining our lithium-ion strategy for trading, assembly and manufacturing, as well as developing our strategic approach for the Energy Storage Vertical in the second half to secure the best outcome for stakeholders.

“As part of our sustainability strategy, we are investigating initiatives to enhance our environmental stewardship and secure the Group’s positioning in the future of green manufacturing. Our efforts are extended through the sponsorship of TWIMS’ Green Manufacturing chair in 2021, furthering South Africa’s executive expertise in this arena to actively combat climate change,“ concluded Haffejee.

ENQUIRIES

Instinctif Partners
Louise Fortuin + 27 (0)71 605 4294
Bandile Nkambule + 27 (0)82 815 1812

NOTES TO EDITORS

About Metair:

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.

Energy Storage

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
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

• FY20 performance reflects COVID-19 shutdown disruption
• Welfare support to employees and direct COVID-19 related costs of R75 million
• Rapid recovery in H2 demand led to improved volumes and production stability
• Robust financial position due to cash preservation and balance sheet protection measures
• 2020 dividend of 75 cents per share declared
• Sufficient cash and available facilities to meet obligations and support growth projects

18 March 2021 – Metair, a leading international manufacturer, distributor and retailer of automotive components and energy storage solutions, today announced a resilient performance for the 2020 financial year characterised by unprecedented uncertainty and significant disruption as a result of COVID-19 lockdowns.

Group revenue was 9% lower at R10.3 billion on the back of the decline in vehicle demand in the first half. Group operating profit came in 45% lower at R561 million, reflecting the squeeze on margins and under-recovery of fixed costs in production. Group EBITDA (including associates and excluding impairments) of R891 million was achieved and headline earnings per share ended at 148 cents for the year, compared with the loss per share of 56 cents in the first half, demonstrating the second half recovery.

Riaz Haffejee, Metair’s newly appointed CEO, commented: “The Group successfully implemented our COVID-19 response strategy, limiting the impact of disruptions on our people, operations and financial position, and securing a U-shaped recovery in line with our Vision 2022. The second half performance was particularly pleasing as the Group demonstrated the required agility to respond to the rapid recovery in demand.

The Automotive Components vertical which derives most of its revenue from Original Equipment Manufacturers (OEMs) within South Africa was directly impacted by the national lockdown and subsequent phased reopening. South African OEM production for the year dropped 32% despite volumes normalising mid-fourth quarter. The weaker Rand during the period offset the operational volume decline, returning revenue of R4.9 billion, a decrease of just 12%. Despite the profit erosion from manufacturing inefficiencies and limited volumes, the vertical recovered from a loss in the first half to deliver operating profit of R88 million. The outlook for the vertical is positive with OEM activity anticipated to recover to near FY19 levels however, global supply chain challenges remain a risk to stable production.

The Energy Storage vertical contribution was supported by exceptional performances from Mutlu Akü (Turkey) and Rombat (Romania) which both achieved improved local operating profit. Revenue for this vertical declined 6% to R6.4 billion and operating profit of R588 million was achieved. In Turkey, local aftermarket and OEM demand remained strong but export volumes were negatively impacted by border closures and logistics constraints. In Romania, OEM, aftermarket and export volumes largely rebounded to FY19 levels due to sustained demand experienced from May. In South Africa, post-lockdown aftermarket demand was strong but OEM volumes remained under pressure and industrial demand was particularly weak, negatively impacting First National Battery’s contribution. With the ability to serve and reach export customers as economies open up, the outlook for energy storage is encouraging. Automotive battery sales volumes are expected to be slightly higher than FY19 levels, aftermarket and OEM volumes should be sustained and exports should improve.

The working capital cycle was well controlled resulting in strong cash generation and R687 million of free cash flow during the period. The focus on cash management during the year resulted in R1.6 billion in cash and cash equivalents at year end. Net debt levels were prudently managed and reduced by R513 million to R805 million. Capex spend for the year was well controlled and totalled R247 million. Unutilised and available finance facilities totalled R2.3 billion when translating foreign currency facilities into the rand equivalent.

“The second half recovery and improved market visibility supported the Board’s decision to resume dividends. Our financial position remains strong and we will continue to drive effective project management and operating efficiencies to maintain our current base as we enter an intensive capital expenditure cycle to invest in future returns,” commented, Sjoerd Douwenga, Metair’s CFO.

A total of R1.3 billion in capex has been allocated for 2021. Majority of the committed capex relates to investment in facilities, tooling and machinery to support new projects that can deliver up to R35 billion in revenue over the expected 10-year model lifecycle with production planned to start in 2022. The largest approved project relates to new Ford contracts. This project involves major investments in greenfield facilities that will create around 3300 new employment opportunities and contribute to economic and social upliftment in the communities of Stanger, northern KwaZulu Natal and Silverton, Gauteng.

From an Energy Storage perspective, investments will be made towards capacity and efficiency enhancements at Mutlu Akü and expansion of Metair’s automotive battery product range. Following completion of the lithium-ion production facility in Romania at the end of 2019, the commissioning of the facility and commencement of lithium-ion cell production is planned for the second half of the current financial year. This facility is of strategic importance as an incubator to build Metair’s intellectual property in the development of bespoke chemistries, technologies and manufacturing facilities, and in positioning Metair as a potential development partner for OEMs in pursuit of their own technological advancement.

“We are well positioned to secure increased share in the significant local automotive industry growth. This should be supported by our achievement of a Level 1 Group consolidated B-BBEE score and positive movements in other sustainability metrics as part of our commitment to stewardship.

“Among other priorities for the current year, ensuring a smooth leadership transition at all levels and supporting flawless launches of new models and facelifts are key. The Board remains committed to evaluate the best way forward to unlock value for stakeholders with the previously announced strategic review aimed for completion in the second half of this year” concluded Haffejee.

NOTES TO EDITORS

About Metair:

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.

Energy Storage
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
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

• Revenue declined 27% to R3.9 billion on lower volumes
• Focused cost containment limited operating loss to R18 million
• EBITDA down to R139 million and headline loss per share of 56 cents
• Cash generated from operations 27% higher at R221 million
• Welfare support to employees and direct Covid-19 related costs of R68 million
• Sufficient cash and available facilities to meet obligations and support growth projects
• 2019 dividend deferred, no interim dividend declared
• Strategic review execution timeline postponed and value unlock evaluation ongoing
• CEO succession process on track

19 August 2020 – Metair, a leading international manufacturer, distributor and retailer of energy storage solutions and automotive components, today announced a subdued interim performance for the six months to 30 June 2020, following the disruption caused by various Covid-19 lockdowns implemented in key markets.

Theo Loock, Metair’s CEO, commented: “The Group acted quickly to limit the impact of the disruptions stemming from the pandemic, delivering a good result in difficult circumstances supported by well executed cost containment efforts. These results reflect disciplined cash utilisation and improved working capital management as well as investments made towards employee wellbeing and personal sacrifices by all employees.”

The Automotive Components vertical which derives most of its revenue from Original Equipment Manufacturers (OEMs) within South Africa was directly impacted by the national lockdown and subsequent phased reopening which resulted in a 42% drop in South African OEM production. First quarter volumes were also negatively impacted by a strike at a major OEM customer and late starts to the year by certain OEMs. Revenue decreased by 38% to R1.8 billion and an operating loss of R48 million was recorded. Despite the challenges of reduced production, tied up working capital and long lead times on imported materials, the vertical contributed EBITDA of R21 million. Supply chain risk has been minimised as supply levels have been maintained to service customer requests. As OEMs get closer to planned vehicle build plans, the working capital cycle is expected to normalise in the third quarter.

The Energy Storage vertical performance was aided by both Mutlu Akü (Turkey) and Rombat (Romania) being able to trade throughout the period, with local aftermarket and export sales offsetting the loss of OEM sales. Automotive volumes fell 27%, mainly due to reduced OEM sales across all territories and reduced export sales volumes out of Turkey, while industrial sales volumes in South Africa and Turkey declined 35% on the back of particularly weak demand. Although revenue declined 19% to R2.5 billion, an operating profit of R74 million and EBITDA of R178 million was achieved. The working capital cycle was well controlled resulting in strong cash generation and R339 million of free cash flow during the period. Leveraging on the strength of supply chain security, inventory levels are being stocked ahead of the second half peak cycle in Europe and as markets are anticipated to open up.

“Our timely Covid-19 response strategy has served us well to date and maps a plan for recovery in both our business verticals with both verticals showing good prospects for a second half rebound. As lockdown conditions have eased, trading levels have increased, we have seen good aftermarket demand and exports out of key markets are improving. The Automotive Components recovery should be driven by improved manufacturing volumes and stability as well as increased export demand from Europe with secured growth projects to support a quicker turnaround than would otherwise be possible,” added Loock.

A crucial element of the Covid-19 response strategy is the creation of Metair’s future vision: Vision 2022, which shapes the Group’s designed recovery post the pandemic. The focus is on a multi-stepped U-shaped recovery designed to avoid an L-shaped recovery curve, specifically supported by the Automotive Components vertical recovery which is project-based, given the anticipated full-year decline of 30% in South African production volumes in 2020.

Metair focused on new model launch projects as well as the most sustainable projects, customers, models, and markets, and approved a R1,3 billion investment to support new projects that can deliver between R25 billion and R28 billion of turnover over a 7 year period starting in 2022, depending on the final project volumes and product designs. In addition to the projects already announced, there are further model launches and planned model facelifts that could have a positive effect on the local automotive sector, even in the short term.

From an Energy Storage perspective, a significant amount of focus is on improving insight into aftermarket demand and on structurally adapting the cost base and business activities to increase agility. The ability to serve and reach export customers and markets is a key requirement to support a good second half performance.

“Our solvency and liquidity position remains strong with sufficient cash and available facilities to meet obligations and support growth projects. Management continue to closely monitor the Group’s financial position and remains focused on effective cash, cost, and capex management.

We are proactively engaging with our funders given the reduced EBITDA recorded for the period and they are supportive given the environment. We have also taken the decision not to declare an interim dividend for this reporting period and to defer the 2019 dividend declared in March in order to ensure compliance with liquidity requirements in terms of the Companies Act,” explained Sjoerd Douwenga, CFO of Metair.

Net debt levels were prudently managed and increased just slightly to R1.4 billion. Net cash on hand amounted to R1.2 billion, assisted by deferment of the 2019 financial year dividend payment, lower capital expenditure and overall improved working capital management. Unutilised and available finance facilities totalled R2.8 billion when translating foreign currency facilities into the rand equivalent.

Given the effects of the pandemic and management attention required to address this, the Board has decided to shift the strategic review execution timeline, with it set to be re-evaluated in early 2021. Both business verticals continue to attract high levels of interest and the Board is committed to evaluate the best way forward to unlock value for stakeholders.

The CEO succession process is progressing well with all formal legalities and agreements concluded with Mr Loock who will be retiring with effect from 31 December 2020. The search for a suitable candidate has been assigned to Heinrich and Struggles and the interview process has shifted externally with the internal phase having been completed.

Instinctif Partners +27 (0)11 447 3030 Louise Fortuin + 27 (0)71 605 4294 Bandile Nkambule +27 (0)82 815 1812

NOTES TO EDITORS

About Metair:

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.

Energy Storage 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 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

• 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.

ENQUIRIES

Instinctif Partners  +27 (0)11 447 3030
Louise Fortuin       +27 (0)71 605 4294
Gift Dlamini           +27 (0)82 608 6587

NOTES TO EDITORS

About Metair:

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.

Energy Storage
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
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

• 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.

ENDS

ENQUIRIES

Instinctif Partners   +27 (0)11 447 3030
Frederic Cornet      +27 (0)83 307 8286
Gift Dlamini            +27 (0)82 608 6587

NOTES TO EDITORS

About Metair:

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.

Energy Storage

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

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

• Revenue up 8% to R10.28 billion
• Operating profit 19% higher at R1.00 billion
• HEPS increased 16% to 327 cents
• Dividend per share of 100 cents declared, up 25%
• Continued strong performance from both the Energy Storage and Automotive Component verticals
• Successful first investment in lithium-ion business and technology

14 March 2019 – 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 2018.

Group revenue increased 8% to R10.28 billion and operating profit grew 19% with the group operating margin improving to 9.8% from 8.9%, supported by a 16% improvement in operating profit from the Automotive Components vertical and a 17% improvement in the Energy Storage vertical. Group earnings before interest, tax, depreciation and amortisation (EBITDA) increased 9.4% to R1.33 billion and headline earnings per share rose 16% to 327 cents. Group borrowings decreased to R1.8 billion with the net debt/equity ratio ending the period at an appropriately conservative 30%.

Theo Loock, Metair’s Managing Director, commented: “This is a record performance for us and a fantastic set of results given the handful of challenges we had to navigate including currency volatility and subdued economic growth experienced across our markets.

“Contrary to the reporting trend by South African businesses that have invested overseas, we saw a strong contribution from our overseas acquisitions in the Energy Storage vertical, particularly Mutlu Akü in Turkey, which managed to outperform the Turkish Lira currency weakness for a fifth year in a row, and Rombat in Romania which operated at full capacity in the second half. These results were also bolstered by good volume throughput from our Automotive Components vertical, supported by its continued focus on product and customer diversification.”

The Energy Storage vertical reported a combined growth in revenue of 3% to R6.38 billion and increased profit before interest and tax (“PBIT”) by 17% to R692 million. Exports improved, in line with Metair’s long-term strategy, through two automotive supply contracts with strategic aftermarket customers, one being in the USA.

Despite challenging global political and trade conditions Mutlu Akü continued its resilient in-country performance, delivering a 27% increase in turnover and 55% increase in profitability owing to margin expansion from increased exports, good cost management and price recoveries which offset the Turkish Lira currency weakness. This translated into an improved operating profit contribution in Rand of R428 million.

Rombat performed well, with an in-country increase in profit of 29% translating into a profit contribution in Rand that increased 31% to R87 million.

The turnaround at First National Battery is according to plan and the business delivered improvements in manufacturing and marketing efficiencies, while investing in promoting the First National Battery brand and retail network, combined with customer focused improvement plans to increase localisation. First National Battery delivered a 6% improvement in PBIT to R162 million despite the second half being negatively impacted by labour instability linked to bi-annual wage negotiations.

Volume growth underpinned by higher levels of exports, continued expansion and deepening of localisation, and efficiencies derived from production and labour stability saw the Automotive Components vertical achieve a 16,3% rise in revenue to R5.07 billion and a pleasing 16,5% increase in PBIT of R509 million.

In February 2018, Metair acquired a 35% shareholding in Prime Motors which is being geared to be Metair’s incubator and research and development centre for lithium-ion battery development. The period was eventful for Prime Motors which profitably moved from pre-sales to first customer engagement and sales. It secured its first lithium-ion coating and cell assembly manufacturing line, developed a low temperature lithium-ion starter battery, received its first request to quote for lithium-ion starter batteries and supplied several lithium-ion battery pack solutions, while launching the first electric vehicle business in Romania in partnership with Rombat. The next step to accelerate this businesses growth is for the installation and commissioning of the lithium-ion line to be approved by the investment committee.

“We are pleased with our international investments. Aside from the great performances out of Turkey and Romania we have seen the benefit of technology transfer through the partnership with Prime Motors, Moll Germany has taught us a valuable technology lesson, has introduced us to a major German OEM customer and presented our first lithium-ion starter battery opportunity.” commented Loock.

Metair’s strategy has always been customer, market and technology driven and in line with the automotive industry principle of continuous improvement, Metair reviews and confirms its strategy annually.

Metair’s latest strategy review has shown that it will best secure global relevance by fully utilising its current lead acid base energy storage businesses while engineering a cost-efficient way of gaining relevance with alternative lithium-ion technology product solutions. “The benefit of such a technology-focused strategy is that it is possible to gain customer take off and investment support agreements prior to any major capital commitments in new technology manufacturing facilities. It also aligns with Metair’s European customers’ call for dual technology solution providers.” added Loock.

Looking forward, Loock commented: “Geo-political uncertainty and wage negotiations are expected to have an impact in South Africa and Turkey, driving concern around consumer confidence and labour volatility. We do however expect favourable conditions for our automotive component business in the short to medium term, based on the increased stability and certainty brought about by the extension of the APDP, conclusion of the South African Automotive Master plan (SAAM), as well as expected record vehicle export levels.

“We are well positioned to benefit from the shift towards increased connectivity, innovation and full electric vehicles. Our focus is on expanding our aftermarket lead acid battery export customer base including production of customer branded aftermarket product requirements and improving First National Battery’s performance in South Africa.”

ENDS

ENQUIRIES

Instinctif Partners +27 (0)11 447 3030
Louise Fortuin + 27 (0)71 605 4294
Gift Dlamini +27 (0)82 608 6587

NOTES TO EDITORS

About Metair:

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.

Energy Storage

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

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