New cars depress Metair earnings

Metair, the battery and vehicle component maker, on Tuesday blamed new car model launches for its expected drop in headline earnings per share for the year to December 2016.

The company, which provides batteries and energy storage for a wide range of industries including automotive and nuclear power, said it expected its headline earnings per share to be 9.68%-7.26% lower than the 248c reported in the previous period.

Earnings per share are expected to be 222c-228c from 267c in the previous period.

The company said it experienced new-car model launch challenges during the first half of 2016. “New-model launches are always associated with lower margins,” it said.

The vehicle components business is expected to achieve low double-digit full-year turnover growth. Metair said technological advances, an overall weaker rand, product and customer expansion countered the expected 10% overall volume reduction linked to major product exposure associated with new models.

The energy operations had a strong finish to the year as the Turkish and Romanian battery businesses experienced record production output for the year on “excellent last-quarter demand”, Metair said.

But the energy storage business performance in SA continued to be under pressure with margins negatively affected by competition, as well as “disruption and inefficiency caused by the establishment of a dedicated original equipment manufacturer production facility”. Due to the mixed performance from the energy storage operations, Metair expects low single-digit improvement in operating profit from the operations.