JSE-listed automotive components manufacturer and distributor Metair has reported a 27% year-on-year increase in operating profit to R450-million for the six months ended June 30, while revenue increased by 53% year-on-year to R8.65-billion.

“There have been pleasing improvements in operating performances across most subsidiaries, and the consolidation of Hesto has reduced Metair’s complexity and improved visibility, while AutoZone’s bedding down and turnaround continues.

“The new debt package has provided a more sustainable capital structure with better-aligned repayment terms,” CEO Paul O’Flaherty commented.

The operational and financial improvements are as a result of volume recoveries at Metair’s original-equipment manufacturer (OEM) customers, in addition to efficiency initiatives, which were supported by improved operating performances across most of its subsidiaries, as well as cost savings at the corporate level.

Earnings before interest, taxes, depreciation and amortisation (Ebitda) increased by 40% to R716-million.

Metair benefited from the inclusion of Hesto Harnesses for three months of the six-month period, partially offset by losses from AutoZone, which was expected given that AutoZone is in a recovery phase as it emerges from business rescue, O’Flaherty said during a September 10 presentation of the group's interim results.

Metair’s total headline earnings per share (HEPS), including discontinued operations, rose significantly to 65c, up from a loss a share of 3c in the same interim period in the prior financial year, which had included the losses from disposed Türkiye automotive battery manufacturer Mutlu Akü.

Group HEPS from continuing operations decreased by 8% to 71c, compared to 77c in the interim 2024 period.

“Overall, we saw improved performance from all our subsidiaries and the restructuring is starting to bear fruit. The debt restructuring that was concluded gives us sustainability going forward,” he said.

One of the key challenges that Metair faced in recent years was resolving the debt tenor.

A debt restructure was successfully implemented during the six-month period, which allowed for a repayment profile that matched expected earnings growth and cash flows over the repayment period, said O’Flaherty.

The group's debt restructure and refinance programme was aimed at optimising the capital structure and providing Metair with a more sustainable debt structure, with appropriately aligned repayment terms, he said.

Group net debt increased to R5.1-billion, up from R2.7-billion at the end of its 2024 financial year.

The increase in net debt was driven primarily by the consolidation of Hesto’s net debt of R1.5-billion at April 1, 2025, as well as a reduction in cash, which declined to R143-million from R808-million at the end of the 2024 financial year, said Metair CFO Alastair Walker.

The group posted a loss after tax from continuing operations of R137-million, compared with a profit after tax of R158-million in the 2024 interim period. This loss was impacted primarily by the one-off net capital loss relating to the accounting for Hesto as a subsidiary, losses from AutoZone, and the increased interest expense, he said.

The higher interest costs following the debt refinance, as well as the consolidation of Hesto, resulted in a notable increase in the interest charge to R283-million, up from R153-million in the first-half of 2024.

Further, revenue from its OEM segment, including Hesto, grew by 67% to R5.4-billion, up from R3.2-billion in the 2024 interim period. This was mainly owing to increased volumes supplied to key OEM customers during the period under review, as well as Hesto’s inclusion as a subsidiary and its strong performance.

Additionally, the group invested R154-million during the six-month period, down from R261-million in the interim period of the 2024 year, of which R88-million was spent on maintenance during the period under review, R62-million on expansion and R4-million on health and safety, said Walker.

Metair was also gearing up for a major customer’s new launch during the first part of 2026 and there was increased focus on project management and capital allocation.

Meanwhile, the company was continuing to execute its strategy in which it would focus on its OEM manufacturer customers, and aftermarket parts and retail, O’Flaherty said.

“This is an important change for us, as the diversification into aftermarket parts and retail gives us protection against volumes changes in the OEM manufacturing segment.

“We will continue to restructure and rightsize the business, as well as improve our project management capabilities. In preparation for the challenges we foresee in 2026, we need to be dynamic and agile. The message to all our manufacturing plants is that they need to adjust to market conditions. We have seen good responses from our companies to do this, and they need to be flexible and agile in this market,” he said.

The group was building on the foundations of continuous operational improvement and efficient project management established over the past 18 months, which would further enhance margins and improve returns on invested capital, he added.

The 2026 financial year will be a challenging year, as one of Metair's major customers is introducing a new vehicle. Another key customer is optimising its manufacturing operations to market demand conditions, and continues to work closely with all affected parties as the changes become clearer over time.

“As a result, we will continue with the significant efforts we have made over the last 18 months in improving project management capabilities and flexing our production and costs to remain agile in a challenging market,” said O’Flaherty.

Meanwhile, steel producer ArcelorMittal South Africa announced in August that it would close its long steel business at the end of September.

“Despite commitments made to produce the steel orders that we required for the remainder of the year, this did not happen.

“Metair is working closely with our customers on the alternative steel supplier that we have been engaging with for some time to ensure our supply commitments are met,” he said.