Metair will revisit its plan to potentially split into two following the recovery of its business in the six months to end June.

Metair manufactures, assembles, distributes and retails energy storage products and automotive components in Africa, Europe, Turkey, the Middle East and Russia.

CEO Riaz Haffejee said on Thursday that the recovery of the components and energy storage verticals was a necessary first milestone before considering a possible split, followed by an evaluation of emerging industry trends, which is set to conclude in the fourth quarter of the year.

Thereafter the company will consider the options on the table regarding a potential split.

“We are going to position the business in future for optimal value unlock and there are a number of options on the table. We are not discounting [a split], we are not taking it away, we are saying that it is still a possibility.”

Metair this week reported its financial results for the six months ended June 30, noting a recovery from the impact of the Covid-19 pandemic, with revenue increasing by 51%, to R5.9-billion, compared with the same period last year.

Operating profit surged to R545-million, up from an R18-million loss, with the operating margin at 9.2%. 

“Our teams have done an excellent job in executing our Covid-19 response strategy to ensure that our operations recovered to benefit from higher levels of demand, and that we continued to deliver on customer commitments by adapting effective strategies to manage significant supply-chain disruptions during the period,” said Haffejee.

The automotive components vertical, which is dependent on the production of South African original equipment manufacturers (OEM, or vehicle manufacturers), was positively impacted by new model launches, vehicle facelifts and general market recovery, and was able to secure a U-shaped recovery. 

OEM production volumes increased by 54%, buoyed by higher export demand for locally produced vehicles, resulting in an 88% improvement in group revenue contribution to R3.5-billion.

Operating profit in this business improved to R254-million, up from a R48-million loss. 

The energy storage vertical achieved a 42% increase in automotive sales volumes, to 3.96-million units, supported by continued strong local aftermarket, OEM and export demand across regions. 

The V-shaped recovery in this vertical was driven largely by improved export volumes from Mutlu Akü, in Turkey.

This vertical contributed a 32% increase in revenue to R3.3-billion, while operating profit rose from R74-million, to R328-million.

Capital Expenditure
A total of R1.6-billion in capital expenditure (capex) has been approved for the financial year in support of new project launches in automotive components, and absorbent glass matte (AGM) technology in the energy storage business. 

AGM technology represented the latest in advanced lead-acid stop-start batteries, explained Metair CFO Sjoerd Douwenga.

Just more than R390-million in capex was spent in the first half of the year, predominantly on expansion projects, as well as on maintenance and health and safety.

For the second half, capex will be focused on new business expansion for the automotive components vertical in facilities, tooling and machinery. 

Metair said it was supporting its customers in their efforts to catch back lost production owing to the civil unrest and widespread looting experienced in parts of South Africa in July.

The company reported short-lived disruption to its own operations, with no physical damage to properties and minimal stock losses experienced at third-party sites. 

Metair noted that it was optimistic about the prospects of a full year of local OEM production that should return to pre-Covid-19 levels – beating 2019 levels in 2022­ ­–subject to supply-chain stability and successful project launches. 

Mutlu Akü and Rombat achieved record first-half battery volumes and Metair expected the second-half performance from the energy storage business to remain strong, supported by the colder northern hemisphere weather.

“We . . . look forward to refining our lithium-ion strategy for trading, assembly and manufacturing, as well as developing our strategic approach for the energy storage vertical in the second half to secure the best outcome for stakeholders,” added Haffejee.

He noted that the company was also currently investigating the installation of green energy solutions at its manufacturing sites.