Metair surges after encouraging trading update

Shares in Metair surged 8.37percent yesterday after the JSE-listed leading international manufacturer, distributor and retailer of energy storage solutions and automotive components reported that it expected a double-digit increase in earnings for the year to December.

The earnings growth was attributed to stronger performances by all its businesses.

Metair shares closed yesterday at R22 compared with its R21.55 closing price on Monday.

The company said headline earnings a share for the year to December were expected to be between 20.6percent and 24.6percent higher than in the previous year. This equates to headline earnings a share of between 276cents and 285c for this reporting period compared with 229c in the previous year.

Metair said its automotive component business recovered after a difficult 2016 to return to satisfactory profitability after the disruption of the new vehicle launch of one of its major customers.

“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,” it said.

Metair said the automotive components business was expected to achieve mid-single digit full-year turnover growth profit before interest and tax (PBIT) margins of about 10percent for the full year.

Margins were higher than the revised medium-term guidance provided in December last year of between 7percent and 9percent, largely because of certain non-recurring items.

Metair said the major improvement in performance in the automotive components business was at Hesto Harnesses, which improved from a loss position in 2016.

Metair maintained 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 7percent and 8percent.

The company’s energy business had a strong finish to the year, with the Turkish battery business again experiencing record production output for the year on the back of excellent last quarter demand.

However, it said the exceptional operating performance from Turkey was muted by the weak Turkish lira as a result of political uncertainty.

But Metair said 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 rand, as well as higher lead prices.

Metair expects to publish its annual financial results on March 15.

– BUSINESS REPORT 

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