SIMON BROWN: I’m chatting now with Riaz Haffejee. He is Metair’s fairly newly installed CEO. [In your] results for year-end December, revenue was off 9%, headline earnings per share (Heps) down 56%, debt down by half a billion, [from R1.32 billion to R805 million]. Riaz, I appreciate your early morning time. By my math, the second half was actually not bad. You did about 200 cents headline earnings per share, because it had actually been a loss in H1. You’ve been operating at 100% since Level 3. Has demand started coming back?
RIAZ HAFFEJEE: Good morning, Simon. Thanks for having me on the show. Yes, I think demand has started to come back. We saw that probably in the second half of the year, but more importantly in the fourth quarter we were running, the factories were open, either automotive components or in the energy vertical. They were open from the start of the third quarter, but really we saw demand started to come back in the fourth quarter.
For the battery business overseas the winter months provide the peak. So we had a good run into those winter months. And for automotive components, as demand spiked for export sales – you know, in South Africa 60% of what’s manufactured here is exported, and that’s to Europe in the UK and other parts of the world – as that started to spike, we started to see, well, this is coming closer to 2019 volumes, which meant to us it was starting to recover. And that seems to have come into 2021 as well.
SIMON BROWN: I was watching the results presentation you did yesterday afternoon. A lot of new-model launches and model tweaks are coming over the next couple of years locally. There’s a giant Ford facility coming, Nissan and the like. I imagine that is a benefit to Metair. You’re a supplier into the industry. Some upfront costs, maybe even some margin squeeze initially, as you sort of retool and position yourself, but if we roll it down two or three years as these productions get up and running, that is a direct benefit to Metair as you sell automotive components into it.
RIAZ HAFFEJEE: Yes, that’s right. We are in a good position for that, because we have good companies in the component space. We have good teams that are there. We have a good reputation for very good technical partners. So there are good opportunities in the future for us to diversify our customer base in the future. And that brings then sort of layered revenue on top, as the years go on.
SIMON BROWN: Your other sort of major division is your energy storage. I remember the Rombat start-stop batteries, when you built that facility in Romania. Is this the space? Obviously energy storage is hugely moving towards solar, renewable; it’s moving towards electric vehicles and the like. Is this an area that Metair is looking into and hoping to get involved in over the years ahead?
RIAZ HAFFEJEE: It is, because [of] the shift in energy storage, particularly for those applications where you have renewable energies involved. Previously that was done with certain types of lead-acid batteries, and now that’s moved very quickly to lithium-ion. We still use lead-acid in some applications, but it’s used now with lithium-ion. So there’s really three versions of lead-acid battery manufacturing. One is to actually make the cells themselves, the second one is to assemble the batteries from the cells, and the third one is just to trade lithium-ion batteries from other manufacturers.
We’ve been trading with lithium-ion in our various companies for some years now. As that change has happened, we’ve also started to assemble batteries in certain applications, but we are now testing whether we can manufacture those cells. And that’s the lithium-ion plant in Romania. But that’s at a very early stage.
So we started it, but Covid put that under some pressure to get it going. And now we’re kick-starting again.
SIMON BROWN: The Romanian plant – that production, if I recall correctly, is sort of targeting production later in the financial year, toward the end of the year.
RIAZ HAFFEJEE: Yes, that’s our aim.
SIMON BROWN: We’ll leave that there. Riaz Haffejee is CEO of Metair. I appreciate your early morning, sir.