Shares in automotive components and battery maker Metair jumped almost 15% in early trade on Wednesday after the company extended CEO Paul O’Flaherty’s tenure until the end of 2028 as he continues to oversee the group’s turnaround.
The group reported revenue from continuing operations fell 2% to R11.8bn in the year to end-December, largely due to lower production volumes at local original equipment manufacturers (OEMs), particularly Toyota SA.
Still, operating profit rose 28% to R603m, supported by “improved operational efficiencies and cost management”, the company said in a statement on Wednesday.
O’Flaherty said the company’s restructuring efforts have been key to the improvement. “We’ve restructured the company to fit our business to OEM volumes. We’re geared up for lower or higher volumes and are re-addressing our footprint to be more flexible. Our diversification strategy, including the acquisition of AutoZone, will help us move away from reliance on OEMs,” he said.
The acquisition of AutoZone for R278.5m in 2024 is expected to provide a platform for growth in the aftermarket automotive parts and services sector, diversifying revenue streams.
“We expect AutoZone to achieve margins of 5%-6% in an SA market of about 13-million cars needing parts,” O’Flaherty said.
The company is reducing fixed overheads and making them more variable to adapt to fluctuating OEM demand, he said, adding: “We’re becoming more efficient and flexible to adapt to changing volumes."
Headline earnings per share (HEPS) for continuing operations decreased 9% to 89c, mainly due to lower profitability in the overall automotive business.
No dividend was declared.
Metair’s reset efforts gained traction in the 2024 financial year and included the disposal of its Turkish business.
“The disposal of Mutlu Akü reduced Metair’s exposure to hyperinflationary and high-interest-rate environments in Turkey,” the company said.
Subsidiary Hesto Harnesses reported a R253m profit before interest and tax, compared to a R608m loss in the prior year.
The company completed a debt restructuring agreement after the year-end, which reduced net debt to about R4bn from R4.5bn.
IG senior market analyst Shaun Murison said the 28% increase in the company’s operating profit indicated a strong financial performance despite tough conditions.
“The successful debt restructuring provides a sustainable capital structure, aligning with future cash flows and reducing financial risks. Hesto Harnesses achieved a significant turnaround, showcasing operational improvements,” he said.
In keeping with the world transitioning to electric vehicles and sustainable mobility solutions, the company is keeping a close eye on global trends, O’Flaherty said. “While the SA market will take longer to adopt electric vehicles, Metair is adjusting by ensuring its component parts are suitable for hybrid models.”
The company said the decision to extend O’Flaherty’s term was premised on his positive contribution to the implementation of its turnaround plan.
“The board believes this decision will provide leadership certainty to Metair’s multiple stakeholders and the necessary runway for the execution of the group’s long-term growth strategy and succession plans,” it said.
Metair also announced that Anesh Jogia had resigned as CFO but would serve his notice period until the end of June.
O’Flaherty identified his top priorities for the next three years: “First, ensuring the company produces enough cash flow to support our debt. Second, expanding our aftermarket business, including AutoZone. Third, exploring opportunities for aftermarket parts in Sub-Saharan Africa.”
By market close Metair shares had pared most of the day’s gains and were 1.33% firmer at R7.60. The stock has fallen 38% over the past year.
Update: March 26 2025
This story includes comment from Metair CEO and an analyst.
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