Etair slips into loss due to ŠigŠer …osts

JOHANNESBURG - Automotive components and batteries group Metair has reported it slipped into a loss in its 2022 year, hit by higher finance costs, hyperinflation in Turkey, as well as the effects of flooding in KwaZulu-Natal.

The company also reported that its CEO Sjoerd Douwenga was in an accident last Tuesday but is recovering and out of hospital.

Metair, valued at about R4.5 billion on the JSE, reported on it suffered a R32 million headline loss to end-December, from earnings of R682 million previously, though revenue climbed 10 per cent to almost R14 billion.

The firm also halted its dividend, while its net debt doubled to R2.6 billion, with finance costs surging 160 per cent to R377 million.

Launch

The company has been investing in preparation for the launch of new vehicles, notably its Ford Ranger project, but had also sought to bulk up inventory due to supply-chain disruptions, with the industry faced with a semi-conductor shortage and shipping constraints earlier in the year.

Production of the next-generation Ford Ranger had begun in mid-November.

Metair’s SA operations also took a significant hit from the temporary suspension of production at Toyota SA’s Prospecton plant after floods in KwaZulu-Natal. Production stabilised at pre-flood levels in the fourth quarter, which the company described as ‘a huge accomplishment by Toyota SA’.

The revenue contribution of automotive components and energy storage are roughly equal, with batteries contributing slightly more, and including Mutlu Akü in Turkey and First National Battery.

Margins

High levels of inflation in Turkey have also forced the company to implement hyperinflationary accounting for its business there, including restating cost of goods, and helping to slash margins in that business from almost 12 per cent to about two per cent.

Inflation in Turkey rose dramatically during the first-half and peaked at about 90 per cent during the fourth quarter, before settling at 64 per cent for the year, it said.

None of the group’s facilities were affected by the earthquake in Turkey, however, and the company said the hard-currency earnings from exports provided a natural hedge against inflation in that country.

“Although these costs have typically been recovered from customers following a slight time lag, margins have been negatively impacted in the short term.

Market demand has remained strong and international demand for lead acid batteries across all sales channels, but especially Turkey, remains resilient,” it said.

Models

Metair said on Thursday its priority in 2023 is to achieve successful launches of new models and facelifts.

“The outlook for the year is, therefore, dependent on the successful launch of new projects, production normalisation of continuing models and the successful ramp-up to full volume production. The investment in future growth could still bring about short-term margin pressure as volumes ramp-up to normal/ planned levels,” it said.

Shares in Metair were down about 0.3 per cent to R22.36 in morning trade, having fallen by more than a quarter over the past twelve months.