Metair is in the process of finalising its results for the year ended 31 December 2017 (the “Period”) (“Results”) and shareholders are accordingly advised that Metair expects to report:
The automotive component vertical recovered after a difficult 2016, returning to satisfactory profitability after the disruption of the new vehicle launch. Trading for the Period, therefore, sustained the progressive improvement in performance from the second half of 2016. All of the automotive components businesses managed to settle into a more stable post launch business cycle during the Period.
The energy vertical had a strong finish to the year. The Turkish battery business again experienced record production output for the year on the back of excellent last quarter demand. Competition remained high in South Africa, however performance improved after a difficult 2016, as the corrective action at First National Battery progressed as planned.
The exceptional operating performance from Turkey was muted by the weak Turkish Lira as a result of political uncertainty.
This vertical is expected to achieve mid-single digit full year turnover growth, and is also expected to achieve profit before interest and tax (“PBIT”) margins of approximately 10% for the full year. The margins are higher than the revised medium term guidance provided in December 2017 of between 7% and 9%, largely due to certain non-recurring items that improved the margin above the guidance levels.
The major improvement in performance was at Hesto Harnesses specifically, which improved from a loss position in 2016. Metair maintains its medium term guidance that the achievement of targeted production volumes and efficiencies associated with the new technology and stabilisation of manufacturing processes should result in medium term PBIT margins on new business of between 7% and 9%.
Energy Storage vertical
Traditionally strong seasonal volume demand in the winter markets served by Rombat and Mutlu Akü in Europe and the Middle East, supported by a strong performance from Mutlu Akü in particular, partially offset the impact of depreciating foreign currencies (relative to the South African Rand), as well as higher lead prices.
Despite the negative impact of currency translation from Turkish Lira and Romanian Lei to South African Rand, the Energy Storage vertical is expected to achieve an approximate 6% improvement in PBIT, with margins remaining stable at around 9.5%.
Finalisation of long term liquidity
Metair is pleased to advise shareholders that it has successfully secured an additional 5 year revolving credit facility, to the value of R525 million at a margin of 235 basis points above 3 month JIBAR, from Metair’s lenders Standard Bank, ABSA and Investec. The facility was concluded within the existing financing framework and therefore no changes in debt covenants or structures were required.
The financial information on which this trading statement and trading update is based has not been reviewed or reported on by Metair’s external auditors and is the responsibility of the directors of Metair.
The Results are expected to be published on or about Thursday, 15 March 2018 and further details on the Company’s operational and financial performance will be provided.