Rise in Me­tair earn­ings pre­dicted

Low turnover growth

The Star Early Edition - - COMPANIES - Roy Cokayne

ME­TAIR, the JSE-listed in­ter­na­tional man­u­fac­turer, dis­trib­u­tor and re­tailer of en­ergy stor­age so­lu­tions and au­to­mo­tive com­po­nents, ex­pects its earn­ings for the six months to June to be sig­nif­i­cantly higher than in the pre­vi­ous cor­re­spond­ing pe­riod.

Its head­line earn­ings a share for this re­port­ing pe­riod are ex­pected be be­tween 105.6 per­cent and 114.8 per­cent higher than in the prior pe­riod.

This equates to head­line earn­ings a share of be­tween 111 cents and 116c com­pared to 54c in the pre­vi­ous cor­re­spond­ing pe­riod.

Me­tair yes­ter­day at­trib­uted in­creased earn­ings largely to an im­proved per­for­mance from its au­to­mo­tive com­po­nents busi­ness.

It said the re­sults from its en­ergy stor­age busi­ness were ex­pected to be marginally lower due to cur­rency weak­ness of for­eign re­ported earn­ings.

Me­tair said its au­to­mo­tive com­po­nents busi­ness was ex­pected to achieve “low dou­ble digit turnover growth” for the pe­riod as pro­duc­tion vol­umes nor­malised and ramped up.

This fol­lows a ve­hi­cle model change in Me­tair’s pre­vi­ous fi­nan­cial year and the com­pany ex­pe­ri­enc­ing model launch chal­lenges dur­ing the first half of that fi­nan­cial year.

Me­tair added that it ex­pected its au­to­mo­tive com­po­nent busi­ness to achieve profit be­fore in­ter­est and tax mar­gins of be­tween 9 per­cent and 9.5 per­cent for the re­port­ing pe­riod be­cause of man­u­fac­tur­ing and vol­ume sta­bil­ity and the strength of the rand.

“The mar­gins ex­pected to be achieved for the pe­riod are higher than the guid­ance pro­vided pre­vi­ously of be­tween 6 per­cent and 8 per­cent, largely due to the stronger rand, which pro­vided short-term cur­rency gains on im­ported ma­te­ri­als and com­po­nents that are not an­tic­i­pated to con­tinue in the sec­ond half of the 2017 fi­nan­cial year.

“In ad­di­tion new model launches are al­ways as­so­ci­ated with lower mar­gins, and there­fore the com­pany main­tains its guid­ance that the achieve­ment of tar­geted pro­duc­tion vol­umes and ef­fi­cien­cies as­so­ci­ated with the new tech­nol­ogy and con­tin­ued sta­bil­i­sa­tion of man­u­fac­tur­ing pro­cesses is ex­pected to re­sult in sus­tain­able medium-term profit be­fore in­ter­est and tax mar­gins on new busi­ness of be­tween 6 per­cent and 8 per­cent,” it said.

Me­tair said its en­ergy stor­age busi­ness was ex­pected to achieve growth in profit be­fore tax and in­ter­est of be­tween 15 per­cent and 20 per­cent on a lo­cal cur­rency ba­sis. This busi­ness had shown re­silience, de­spite a weaker Turk­ish Lira and higher com­mod­ity prices, to suc­cess­fully re­cover higher in­put costs from the mar­ket over the short term.

Me­tair added that over­all mar­gins were ex­pected to show a mar­ginal im­prove­ment de­spite the im­pact of in­creased in­put costs and higher pro­por­tion of orig­i­nal equip­ment man­u­fac­turer vol­umes.

It at­trib­uted this to an im­proved per­for­mance from the its South African bat­tery busi­ness, higher mar­gin ex­port busi­ness from Tur­key and Ro­ma­nia and a sat­is­fac­tory lo­cal op­er­at­ing per­for­mance from Tur­key.

Me­tair said the en­ergy stor­age busi­ness had been im­pacted ex­ten­sively by for­eign cur­rency trans­la­tion ef­fects, par­tic­u­larly the av­er­age 31 per­cent de­val­u­a­tion in the Turk­ish Lira against the rand. The com­pany’s in­terim fi­nan­cial re­sults are ex­pected to be pub­lished on Au­gust 17.

Shares in Me­tair rose 3.68 per­cent on the JSE yes­ter­day to close at R19.70.

PHOTO: SUPPLIED

Me­tair’s First Na­tional Bat­tery pro­duc­tion line. The com­pany ex­pects earn­ings for the six months to June to be sig­nif­i­cantly higher than in the pre­vi­ous cor­re­spond­ing pe­riod.

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