Johannesburg - Metair, the listed international manufacturer, distributor and retailer of energy storage solutions and automotive components, has been awarded a multi-year global supply agreement by Daimler in Germany for the company’s start/stop batteries.
Theo Loock, the chief executive of Metair, also confirmed last week 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.
Metair is a member of the National Association of Automotive Component and Allied Manufacturers, which falls under the umbrella of the RMI.
Loock said the automotive industry was in the middle of a critical phase of negotiations with Numsa, but highlighted the positive settlements that had been reached with Eskom, where a strike was averted, and the resolution of the dispute and settlement reached in the petrochemical industry.
He said the contract awarded to Metair by Daimler involved “material volumes”, but declined to comment on the impact of the contract on Metair’s annual revenue.
But Loock said the contract award was “a significant achievement that will see a substantial portion of our excess battery production capacity being absorbed” and validated the group’s investment in research and development (R&D).
“The combination of knowledge across the group through the establishment of our central R&D centre in Turkey has enabled us to achieve new levels of expertise and improves our ability to secure highly competitive global contracts with vehicle manufacturers,” he said.
Metair comprises two independent standalone businesses, its automotive component manufacturing and energy storage businesses.
Loock said complexities associated with the new model launch of the group’s major original equipment supplier (OEM) impacted efficiencies and required substantial investment in new technology in the six months to June.
This resulted in operating profit declining by almost 25 percent to R260.2 million from R345.8m.
Headline earnings a share more than halved to 54 cents from 111c as a result.
Group revenue rose almost 14 percent to R4.03 billion from R3.5bn.
Loock said this revenue growth was driven by a higher revenue contribution from the energy storage business, which benefited from a weaker rand and a 7 percent increase in overall automotive volumes.
Flat revenue
The revenue of the automotive component business was flat, with lower production volumes being offset by price increases to recover higher imported vehicle material cost.
The group ended the reporting period in a strong cash position, with R258.9m in cash generated from operations compared to R89.4m in the prior period.
Loock said the group provided guidance that it would be a particularly difficult first half due to the business renewal phase in the automotive components business and the group’s total customer support focus unfortunately put this business in a small loss for the period.
But Loock said despite this the group remained profitable thanks to the positive contribution from the energy storage business.
“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,” he said.
“The board remains confident that successful implementation of our strategy will deliver sustainable growth and quality earnings over the medium term,” he said.
Shares in Metair dropped 2.82 percent on Friday to close at R18.95.
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