Metair delivered a record financial performance in 2021, despite severe supply-chain challenges.

The JSE-listed group is an international manufacturer, distributor and retailer of automotive components and energy storage solutions.

Metair saw group revenue for the financial year ended December 31 increase by 23%, to R12.62-billion, noted CEO Riaz Haffejee as he announced the group’s financial results on Thursday.

Group operating profit rose by 107%, to R1.16-billion, with the operating margin at 9.2%, compared with 5.5% in 2020. 

“Energy Storage performed exceptionally well and ahead of our recovery plan, by capturing all-round increases in market demand,” noted Haffejee.

“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.”

Metair was forced, for example, to spent R150-million in unbudgeted emergency air-freight costs, owing to shipping delays, to secure the necessary materials on time, mostly in the Automotive Components business.

Before the computer-chip shortage and the current global supply-chain crunch, the company had perhaps spent a few hundred thousand rand on air freight, and only on one or two occasions, said CFO Sjoerd Douwenga.

Supply-chain disruptions and component shortages also saw South African new-vehicle production end the year at 503 000 units, which is a 21% improvement on 2020 levels, but well below 2019 levels and expectations – a fact which also impacted on Metair’s expected component delivery for the year.

The impact of global supply-chain disruptions also saw a portion of Metair’s capital expenditure roll over into the 2022 financial year. Expected capital expenditure for 2022 is R1.2-billion.

Metair last year ultimately decided to employ a greater inventory holding strategy to mitigate shipping delays and growing freight costs, with net working capital increasing by 18% in the year as a result, to R2.2-billion.

Some good news was that Haffejee expected supply chain woes to ease towards the end of the year. 

“What we are hearing makes us think there are incremental improvements that are happening. However, it is not enough. It is still very volatile and now we have problems in the Ukraine and that brings added air-freight costs. You also have Covid-19 outbreaks in China that could potentially bring higher costs.”

Metair’s Energy Storage vertical recorded an 18% increase in sales of automotive batteries, to 8.8-million units, for the 2021 financial year, with revenue of R7.5-billion showing the same level of increase. 

Operating profit at the vertical increased by 51%, to R887-million.

The Automotive Components vertical saw revenue jump by 36%, to R6.7-billion, with operating profit soaring by 191%, to R257-million.

Operating profit in this vertical, however, still significantly lagged 2019 pre-Covid-19 levels, while Energy Storage was well ahead of 2019 numbers.

Looking ahead, Haffejee said Metair should surpass all 2019 levels this year.

He added that the group should start rolling out solar power rooftop solutions across its international production network this year, including Europe, owing to rising energy costs.