Africa-Press – South-Africa. Despite various disruptions, vehicle component and battery manufacturer Metair is upbeat about local car output – but its battery businesses in Turkey and Romania have been hit by hyperinflation and the invasion of Ukraine.
Metair manufactures products like brake pads and shock absorbers, while it also produces batteries used in the automotive, telecoms, mining and retail sectors.
Metair previously considered splitting its business into two, and listing (or selling) its battery business in an effort to unlock value for shareholders. But in an operational update on Monday, the group said its plans have “not translated into an executable transaction largely due to the geopolitical climate within Eastern Europe”.
“The board will revisit its strategic options as and when the operating climate improves,” it said.
For the year, volumes from its Romanian battery manufacturer Rombat are expected to fall by 15% due to the impact on demand following the invasion of Ukraine. Its Turkish battery business Mutlu Akü is forecast to increase its export volumes by at least 17% this year, but has been impacted by a spike in inflation, which hit 85.5% in that country in October.
Metair said it saw unprecedented energy and labour cost increases across Turkey and Romania. While price increases have helped to recover some of these increases, margins have been negatively impacted in the short term.
Due to hyperinflation, income from Turkey must be restated. The group is also impacted by new banking regulations that force exporters to sell 40% of their foreign-currency revenue to the central bank.
Volumes at First National Battery in South Africa are expected to be on par with last year.
SA vehicle component business
Despite a semiconductor chip shortage, supply chain delays (due in part to a Transnet strike) and the temporary closure of the Toyota plant near Durban due to floods, Metair is upbeat about local output.
Vehicle production should reach 550 000 cars this year – which is only 10% below 2019 levels, and higher than last year. Metair expects production volumes to increase above 700 000 from 2023 “subject to supply chain stability”.
Production levels at the Toyota plant have stabilised at pre-flood levels, and Metair received R400 million in business interruption insurance following the flood.
The group expects a boost from Ford’s production of the next-generation Ford Ranger at its Silverton plant. Manufacturing of the new model started last month.
Metair expects to incur pre-production and engineering costs of R475 million related to the production of the new model, but Ford’s investment at the plant is expected to provide an estimated R46 billion revenue boost over the “model life”.
The group said they are in a “satisfactory financial position to support current expansion projects”. The JSE-listed company, which currently operates in five countries, wants to expand its operations into five continents in the next five years.
By lunchtime on Monday, its share price was flat at R28.01. It started the year at R27.59.
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