The share price of Metair Investments dropped by almost 10% to R33.10 by mid-afternoon on Wednesday on the back of the publication of the group’s interim results for the six months ended 30 June.
Metair reported an 8% increase in operating profit to R345.8 million from R3.5 billion revenue, up 9% from R3.2 billion in the previous corresponding period. Headline earnings per share (HEPS) decreased to 111c, down from 120c in the first half of the previous financial year.
The Metair share price increased by 5.85% in the past 30 days and 15.05% in the year to date.
During the reporting period Metair increased its shareholding in Mutlu Akü, the lead acid battery manufacturer in Turkey to 100% and effectively de-listed it from the Istanbul Security Exchange.
Mutlu Akü performed well despite difficult trading conditions in the region and currency volatility in its major export markets like Russia. The group says the integration of the company is progressing according to plan.
Demand in the original equipment manufacturing (OEM) segment was stable, with an increase seen in Turkey. The local operations are preparing for planned model changes in the second half of the financial year.
Aftermarket demand was strong in South Africa and Turkey with a slight improvement in Romania.
In the non-automotive and export segment exports were steady, except for exports to the Russian aftermarket, which collapsed as the Russian currency weakened dramatically.
The group successfully launched its Metair International Battery brand and established the group Battery Technology Centre in Turkey. Metair has secured future business from new vehicles launches in 2016 and 2018 requiring its Start/Stop battery technology in Turkey and Europe, which may utilise at least one third of the group’s spare capacity.
Looking forward, Metair says in South Africa it is focused on supporting one of its major customers in launching a new model, which may impact production volumes in the short term.
“Local OE production in Turkey and Romania remains positive,” the group says.
The aftermarket demand in South Africa and Turkey should remain stable, but exports to Russia will depend on whether demand for imported products returns.
Demand for standby and other energy storage systems and solutions in the non-automotive sector should be maintained, Metair said.
The group says while the second half of the year normally reflects the seasonal increase in aftermarket battery demand from the northern hemisphere, the impact of major vehicle model changes in South Africa in the second half is expected to be challenging.