JSE-listed automotive component manufacturer Metair on Thursday reported a 10% increase in revenue to R2.46-billion for the six months ended June, compared with R2.22-billion for the previous corresponding period, mainly owing to the inclusion of Romanian automotive lead-acid batteries manufacturer Rombat for the full interim period.

Metair aquired a 99.1% stake in Rombat in March, as part of its strategy to increase its focus on the aftermarket sector.

Metair reported earnings before interest, tax, depreciation and amortisation of R375-million, compared with R362-million for the previous corresponding period, while the company’s headline earnings per share remained unchanged at 143c.

MD Theo Loock stated that the company was satisfied with the results and, in particular, with the performance of Rombat in a difficult European market.

During this period the company had integrated Rombat into its business and installed the new manufacturing capacity for Metair’s start/stop technology into Rombat.

“We’ve had growth in the European market while the vehicle market in the region declined, which shows the choice of the customers with regard to brand and service,” he told Engineering News Online.

Loock commented that the company’s operations performed well overall with an increase in production in the original equipment (OE) segment and a 31% increase in the turnover of the domestic aftermarket and export products segment to R879-million, from R669-million during the comparative period.

However, earnings from the aftermarket segment grew by only 19%, as increases in commodity prices coupled with rand and Romanian lei weakness impacted negatively on margins.

Local vehicle production during the period was not directly affected by any labour action and increased to 272 718 vehicles produced, compared with 235 557 in the comparable half-year period. The increase in production is on the back of increased exports of 147 007 vehicles.

He added that while the motor industry had reached the end of its three-year wage agreement and had entered a critical phase regarding labour relations, Metair hoped that there would not be prolonged industrial unrest and that production levels could be maintained.

Metair had mitigation strategies in place to deal effectively with two to three weeks of industrial action, however, should the strike continue for more than three weeks the company’s supply to customers would be affected, Loock explained.

Meanwhile, Metair would continue to support and invest in the OE segment and would focus intently on delivering internationally benchmarked, cost-competitive and quality products to its customers.

“The development and marketing of our start/stop battery product range is proceeding according to plan, and we are proud to announce that we have received approval from a second OE manufacturer to supply these batteries to their local operations from 2014,” he said.

Metair’s mining segment had experienced an extremely disappointing six months, as demand from the mining and standby battery segment was significantly below expectations, Loock said.

Distribution, administration and other expenses increased from R258-million to R270-million, owing to a R25-million increase in distribution expenses to R99-million, partly as a result of increased fuel costs. Distribution expenses represented 4% of revenue, with administration and other expenses amounting to R171-million.

Operating profit increased slightly to R274-million from R267-million in the comparative period.

Loock stated that, as Rombat was traditionally a strong second-half company, its overall focus for the second half of this year would be to increase Rombat’s market penetration, market share and distribution footprint.

“We will also intently focus on finding a suitable acquisition to further expand our aftermarket footprint,” Loock concluded.