Manufacturer, distributor and retailer of automotive components, Metair, says its exit from the Turkish market and a slump in local vehicle production will have a significant impact on its 2024 earnings.

The company expects a total loss a share of between 2 145.15c and 2 154.95c for the financial year ended December 31, compared with earnings a share of 49c in the previous year, owing primarily to the capital loss realised on the sale of Mutlu, in Türkiye.

The headline loss a share is expected to be between 185.33c and 212.33c.

“Over the past year, we have focused intensely on areas within our own control, specifically operational execution and ongoing support to customers, while navigating near-term industry headwinds,” says Metair CEO Paul O’Flaherty.

“Pleasingly, measures implemented to reduce costs, optimise manufacturing capabilities and production efficiencies, rationalise unprofitable business lines and adjust commercial strategies were, to a large degree, successful in shielding the group against industry-wide volume reductions.

“It was also critical to mitigate against the increasing financial volatility of, and exposure to, the Mutlu group.”

O’Flaherty says Metair has now “successfully disposed” of Mutlu, albeit at lower net proceeds than expected, which “has substantially de-risked the balance sheet and allowed us to regain control of interest costs”.

He adds that Metair’s operating conditions for the financial year have also been impacted by lower local production at South African vehicle assembly plants, owing to weaker demand from traditional export markets, as well as market share shifts owing to the influx of imports, mainly from China and India.

Metair has been especially impacted by reduced production volumes owing to engine certification issues at one of its major customers, Toyota South Africa Motors.

These issues were, however, resolved in the last quarter of 2024.

Total local market vehicle production declined by about 5%, from 649 231 vehicles in 2023, to 615 989 vehicles in 2024.

While Toyota resumed normal line production in November, the delayed certification process exposed Metair to a yearly volume decline of about 28%.

Some good news is that automotive batteries sold through Metair’s Energy Storage businesses (Rombat and First Battery) improved by 10% – up 405 000 units from 3.9-million units in 2023, to 4.3-million units in 2024, supported by stronger export sales.

The continued improvement initiatives and turnaround at Hesto Harnesses, the group’s major wiring harness supplier, were also positive when considering the significant losses incurred in 2023.

In December, Metair also completed the purchase of AutoZone, which should allow the group to diversify revenue streams and gain access to new markets.

“In South Africa, we are working toward gaining market share by expanding product offerings and entering new sales channels,” notes O’Flaherty.

“While we face short-term challenges related to volume decline and high debt levels, management has made significant progress with regard to its stabilisation and turnaround strategy.

“Hesto has shown a strong recovery, and local operations, such as Lumotech and First Battery, contribute meaningfully to profitability.

“The AutoZone acquisition will be a key strategic driver in terms of diversifying our dependence on local [vehicle manufacturers] and opening new sales channels.”

A final capital restructuring for Metair is well on track, adds O’Flaherty, and will be presented to the Metair board and funders in March.