Meair's First National Battery production line. The company expects earnings for the six months to June to be significantly higher than in the previous corresponding period. Photo: Supplied
JOHANNESBURG – Metair, a leading car component manufacturer, which yesterday delivered its best financial results to the market, is reviewing its strategy after gearing-up to become a maker of leading-edge lithium-ion batteries for electric vehicles.

Prime Motors in Romania, in which Metair acquired a 35 percent stake in February 2018, has become an incubator for lithium-ion battery development, with its own leading-edge technology, Metair chief executive Theo Loock said in an interview yesterday. Car market pundits believe most German and Japanese car makers will surpass Tesla's leading market share in terms of electric vehicle production by 2021.

Metair is currently the sole South African company with lithium-ion battery production facilities.

Metair increased revenue by 8 percent to R10.28 billion and operating profit by 19 percent in the 12 months to end-December 2018 – the operating margin was supported by a 16 percent improvement in operating profit from the automotive components operations, and a 17 percent lift in the energy storage businesses.

Headline earnings were up 16 percent to 327 cents, and the dividend was raised 25 percent to 100c, which with share-buybacks means some 22 percent of earnings before interest, tax, depreciation and amortisation of R1.33bn has been returned to shareholders.

Loock said Prime Motors had profitably moved from pre-sales to first customer engagement and sales. Prime Motors secured its first lithium-ion coating and cell assembly manufacturing line and has developed a low-temperature lithium-ion starter battery.

It 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.

When asked if the company would be competing with Tesla, Loock said Tesla was unlikely to ever contemplate putting up lithium-ion battery production facilities in the countries where Metair operated, such as Romania, Turkey and South Africa.

In addition, Prime Motors had developed world leading chemistry that could solve the problem attached to most electric vehicles very low ambient temperatures drain lithium-ion batteries of power.

“The next step to accelerate this growth is to install and commission the lithium-ion line to be approved by the investment committee,” said Loock. A loss made in Germany at Moll had been a necessary lesson in the upper limits of lead acid battery technology, he added.

The very rapid development of electric vehicle technology meant Metair needed to review whether it was necessary to operate in as many countries as it does, whether to further grow lead-acid battery production, and whether there should be a greater focus on exports.

He said the focus over the next 12 months would be to optimise existing production and facilities, rather than seek acquisitive growth.