Energy storage and automotive component specialist Metair Investments says it is considering splitting its energy storage (ES) and automotive components (AC) businesses, with a decision expected by the end of the year.
This could see the company looking for a listing for its ES business on an international exchange.
This comes as the group charges ahead with switching its planned production of lithium-ion (li-ion) batteries in Romania to Turkey — where it is implementing plans to expand operations.
Speaking to Business Day after the release of the group’s half-year results on Thursday, that reflected nearly a three-quarter shrinkage in profit, Metair CEO Riaz Haffejee said the group was looking to support the successful launches of new models and facelifts during the fourth quarter while recovering from the disruptions faced in the first six months of the year.
Metair and its subsidiary Hesto Harnesses launched the new 35,000m2 Hesto vehicle wiring harness manufacturing facility in KwaDukuza, KwaZulu-Natal, this week — a move that has been heralded by President Cyril Ramaphosa as a crucial economic boost for the coastal region.
The CEO highlighted that a big consideration for the board was whether it would move ahead with spinning off its ES business from the AC segment.
“We are actively in that process and we do wish to have a good outcome for our shareholders,” Haffejee said. “As a result, we say that by the end of the year we should be in a position to explain what that is.”
Energy storage, which contributed 58% of Meatair’s revenue, is a big focus area for many industries globally, with manufacturers eyeing the potential to export into a growing global market.
The spin-off move would possibly allow shareholders to attach value to the energy business, whose principal asset is Turkey-based lead acid battery maker Mutlu Akü.
The owner of First National Battery) in SA previously announced it would move its Li-ion line to its Mutlu Akü subsidiary in Turkey and Haffejee on Thursday said preparation, including securing government incentives in Turkey and agreements with suppliers, was well under way.
“It’s the right market for it, it’s the right skills for it, it’s the right progression of our auxiliary battery technology,” he said. “We are on track with that and there is nothing holding us back ... in time we should have a commissioned plant in Turkey.”
The Johannesburg-based company, valued at R5.23bn on the JSE, previously reported inflation in Turkey had risen dramatically during the previous matching period, which led to the group applying hyperinflationary accounting for amounts reported by Mutlu Akü.
“The results are unfortunately overshadowed by hyperinflation and certain one-off effects whereas the underlying performance is a creditable outcome,” Haffejee said.
Metair generated 53% of its revenue for the latest reporting period on home soil, followed by Turkey and the UK with 33.3%, and the rest from Romania.
In terms of segments, automotive batteries brought in the bulk of revenue with 59.2%, followed by automotive components and customer tooling just over a third (35.9%), and the rest came from industrial and nonautomotive products.
The group experienced numerous challenges in both segments including supply chain delays and material shortages, a lack of semiconductors, which resulted in original equipment manufacturer production volumes falling on home soil.
The floods in April hit Toyota, one of Metair’s big customers, as it halted vehicle production at its Prospector plant in Durban for several months, but Toyota expects production volumes to return to normal in the fourth quarter of 2022.
The challenging headwinds saw revenue fall 1.9% to R5.82bn during the period. While headline earnings per share (Heps), a widely used measure of profit that strips out impairments and one-off items, fell by close to three-quarters to 45c.
Meanwhile, Metair says it is advancing in finding new markets after disruptions in Eastern Europe where the company’s exports were affected by the Russia-Ukraine war.
“We’ve looked at the Middle East market and other markets such as the Americas and we’ve found some additional business so we’ve been able to mitigate the majority of any lost business there.”
No dividend was declared.
Update: September 15 2022
This story has been updated with more information.
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