Key message: With Mutlu sold the strategy to focus on simplifying the capital structure is making good progress.
- Metair released a Trading Update for FY24. The year was characterised by cost reduction, optimising manufacturing and production efficiencies, rationalising unprofitable business lines and adjusting commercial strategies.
- Automotive Components: Reduced customer volumes were partially mitigated by operational efficiencies and cost control. Revenue declined by approx. 8% with EBIT margins at 5.0-5.4% (from 7.1%). Hesto has improved its performance through a strong operational recovery and turnaround initiatives, with turnover expected to be slightly lower at R5.4-5.6bn (pcp R5.7bn) but EBIT improving to R235-265m (from a loss of R608m). Including Hesto, the division is expected to post 7% lower revenue but an EBIT of R600-645m (from a loss of R54m) with margins between 4.7-5.2%.
- Aftermarket Automotive Parts & Services: the division is expected to increase revenue by 9% to R4.6bn with EBIT margins between 5.6-6.1% (from 5%) before impairments and restructuring costs. First Battery saw improved operational efficiencies and scrap recovery with EBIT margins expected to be between 9-11%. Battery sales declined to 1.6m (from 1.8m). Once off restructuring costs of R32m were excluded from EBIT. Rombat sales volumes improved by 23% to 2.8m (from 2.3m) with gains in export sales. Pressure in the local market from imports and exposure to OEM’s has resulted EBIT margins falling to between 1.6-2.0%.
- AutoZone: The R278.5m purchase price results in a R195m purchase gain with net realisable assets being R473m. AutoZone will be consolidated from 31 December 2024.
- Discontinued operations: The sale of Mutlu was concluded on 19 December 2024. The sales price is lower than expected at US$1m due to adjustments to the initial sales price of US$110m for net debt and working capital movements (the final disposal price shall not be more than US$2 million or less than zero). The loss on the sale is expected to be approx. R4bn including costs.
- Metair is going through a significant restructuring process aimed to simplify the group and reduce net debt (now at R4bn including Hesto and associated guarantees).