The manufacturer of car parts and batteries said on Tuesday that it expected headline earnings per share to decline to 45c-55c in the six months to June from 111c in the previous comparable period. Metair is scheduled to release its results on 17 August. The first half of the year is traditionally Metair's toughest, as this is when production ramps up for new model launches.
In 2015, the group said it had secured substantial new business from original equipment manufacturers but warned of complexities associated with volume ramp-up. This included uncertainty around market demand for new vehicles. In the longer term, however, model changes would offer growth opportunities, provided marketpenetration targets were met.
Although SA's vehicle sales have faltered as inflation and interest rates squeeze household income, domestic car exports have continued to increase, supported by the weaker rand. Metair exports products produced in SA, Turkey and Romania to original equipment manufacturers in the rest of Africa, Europe, Turkey, the Middle East and Russia. In 2015, the group derived 40% of its turnover and half of its operating profit offshore.
Metair's energy-storage business, which sells batteries to the aftermarket and industrial clients, recorded a good performance in the six months to June and was expected to increase operating profit from the previous comparable period. The division generated 58% of the company's revenue in 2015.
Anthony Clark, analyst at Vunani Securities, said the expected drop in headline earnings per share had a lot to do with Russian sanctions imposed on Turkey, which made it difficult for Metair to export its products to Russia.
In 2015 exports from Metair's Turkish operation, Mutlu Akü, the country's largest battery manufacturer and distributor, fell 41%. This contributed to the 12.2% drop in profit for 2015, to R554.8m.
Source: Business Day
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