It’s been an interesting six months,” says Metair CEO Riaz Haffejee as he reflects on his company’s financial results for the six months ended June 30.

CFO Sjoerd Douwenga is perhaps a bit less diplomatic as he describes dealing with the Covid-19 pandemic as mere preparation for a culmination of events that saw Metair’s operating profit drop by 73%, to R144-million.

Revenue was down 2%, to R5.8-billion, compared with the previous six months.

The automotive component and energy storage specialist’s perfect storm was driven by a number of events.

The first is hyperinflation in Türkiye, which houses battery producer Mutlu, one of its biggest subsidiaries.

June inflation reached 78.6%.

Hyperinflation also triggered hyper wage demands, which led to a ten-day strike at Mutlu, explains Douwenga.

The strike made a R30-million dent in operating profit.

The impact of hyperinflation on profit after tax for the six months under review amounted to R95-million.

In Romania, Metair’s Rombat battery business is being impacted on by consumer concern, and subsequent frugality, around the war in Ukraine.

Rombat is located only 100 km from the Ukrainian border.

The conflict has also seen a surge in energy prices in Europe, which are now roughly three times more than they were 12 months ago, notes Douwenga.

Rising energy costs took an almost 4% bite out of operating profit at Rombat for the six months to June 30.

Locally, flooding in KwaZulu-Natal earlier this year shut down the Toyota plant for four months, which took a heavy toll on companies in its supplier network, including Metair, bruising the group’s cash flow and liquidity.

Douwenga notes that Metair expects to reach the R500-million cap on its business interruption insurance for this event. A sum of R150-million has already been received.

Looking ahead, Haffejee says production at Toyota is returning to normal after the plant reopened, while new and expanded production of the new Ford Ranger pickup range will buoy Metair’s component business in the coming months.

Metair is also working to deal with hyperinflation in Türkiye on a day-to-day basis, he adds.

The energy crisis, however, is likely to intensify, he notes, especially with the European winter on the horizon.

“Energy costs can go to three, four times more on top of what they are now,” says Douwenga.

It is unlikely that the Ukrainian war will be resolved soon.

Douwenga notes that 80% of the input costs at Mutlu in Türkiye are hard-currency based, as are up to 60% of its sales, which lessens the impact of the local inflation cycle.

Other good news is that global supply chain costs and predictability are both stabilising.

Haffejee says logistics costs are coming down, and that they are now “three to four times” more than pre-Covid-19 conditions, compared with “seven to eight times” last year.