Metair'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
Pretoria - Metair, the JSE-listed international manufacturer, distributor and retailer of energy storage solutions and automotive components, expects its earnings for the six months to June to be significantly higher than in the previous corresponding period.

Its headline earnings a share for this reporting period are expected be between 105.6 percent and 114.8 percent higher than in the prior period.

This equates to headline earnings a share of between 111cents and 116c compared to 54c in the previous corresponding period.

Metair on Wednesday attributed increased earnings largely to an improved performance from its automotive components business.

It said the results from its energy storage business were expected to be marginally lower due to currency weakness of foreign reported earnings.

Read also: Worldwide growth still on Metair's radar 

Metair said its automotive components business was expected to achieve “low double digit turnover growth” for the period as production volumes normalised and ramped up.

This follows a vehicle model change in Metair’s previous financial year and the company experiencing model launch challenges during the first half of that financial year.

Metair added that it expected its automotive component business to achieve profit before interest and tax margins of between 9 percent and 9.5 percent for the reporting period because of manufacturing and volume stability and the strength of the rand.

“The margins expected to be achieved for the period are higher than the guidance provided previously of between 6 percent and 8 percent, largely due to the stronger rand, which provided short-term currency gains on imported materials and components that are not anticipated to continue in the second half of the 2017 financial year.

“In addition new model launches are always associated with lower margins, and therefore the company maintains its guidance that the achievement of targeted production volumes and efficiencies associated with the new technology and continued stabilisation of manufacturing processes is expected to result in sustainable medium-term profit before interest and tax margins on new business of between 6 percent and 8 percent,” it said.

Metair said its energy storage business was expected to achieve growth in profit before tax and interest of between 15 percent and 20 percent on a local currency basis. This business had shown resilience, despite a weaker Turkish Lira and higher commodity prices, to successfully recover higher input costs from the market over the short term.

Metair added that overall margins were expected to show a marginal improvement despite the impact of increased input costs and higher proportion of original equipment manufacturer volumes.

It attributed this to an improved performance from the its South African battery business, higher margin export business from Turkey and Romania and a satisfactory local operating performance from Turkey.

Metair said the energy storage business had been impacted extensively by foreign currency translation effects, particularly the average 31 percent devaluation in the Turkish Lira against the rand. The company’s interim financial results are expected to be published on August 17.

Shares in Metair rose 3.68 percent on the JSE on Wednesday to close at R19.70.