Metair says headline earnings per share should soar as much as 25% in the year to December 2017 with the group’s automotive component operations recovering after a difficult 2016.
The business had returned to "satisfactory profitability" after disruptions from a new vehicle launch. Meanwhile, automotive business margins of 7%-9% were higher than the revised medium-term guidance given in December 2017, due largely to nonrecurring items.
"Trading for the period … sustained the progressive improvement in performance from the second half of 2016 [for the business]," the company said on Tuesday.
Meanwhile, Metair’s battery business had a strong finish to the year. The group has big battery-manufacturing operations in SA, Turkey and Romania, including for vehicles, mining, industrial, railway and renewable energy applications.
The Turkish battery business again experienced record production output for the year on "excellent" fourth-quarter demand. But the "exceptional operating performance" in Turkey was muted by the country’s weak lira currency as a result of political uncertainty, including from the civil war raging in neighbouring Syria. In SA, the First National Battery business performed better than in financial 2016 despite fierce competition. Metair said corrective action in this business had progressed as planned.
The company had secured an additional five-year revolving-credit facility worth R525m at a margin of 235 basis points above the three-month Johannesburg interbank agreed rate, from Standard Bank, ABSA and Investec. This was concluded within the existing financing framework and therefore no changes in debt covenants or structures were required.
The group in mid-2017 had bought a 25.1% stake in Germany-based battery manufacturer Akkumulatorenfabrik Moll for €7.4m cash.
Moll supplies European car manufacturers, including Audi, Daimler, Porsche, Skoda, Lamborghini and Volkswagen. The company has a distribution network across Europe and Asia.
Meanwhile, Chaowei, a Chinese company listed in Hong Kong, is a major producer of e-bike batteries in China. It bought a stake in Moll in 2013. This link provides Metair with access to the Chinese market.
Metair MD Theo Loock said during the half-year to June 2017 that the group was shifting its focus from North American battery and automotive components markets to China, Russia and India. This came after President Donald Trump pulled the US out of climate accords.
Metair also wanted to be ready for new markets in the UK and France, which had signalled a move to electric cars by 2040.