Metair Investments said headline earnings from continuing operations are expected to fall between 0% and 20% as it continues to face challenging operating conditions in the automotive industry and the impact of geopolitical factors.

In a trading statement for the year to December 31 released on Friday, the automotive component manufacturer and energy storage group said it expected headline earnings per share (HEPS) of between 78.56 cents and 98 cents.

Total HEPS, which includes the Türkiye battery manufacturer Mutlu Group, which was disposed of in December due to the financial instability in that country, would amount to a headline loss per share of between 185.33 cents and 212.33 cents, compared with HEPS of 135 cents last year.

Due to a debt restructuring and other corporate activities being undertaken, the full-year results are expected to be published on March 26.

“The year under review required ongoing agility to mitigate against the challenges in the markets in which Metair operates. The group focused on areas within its control, especially operational execution and continued to support customers, while navigating near-term industry headwinds,” directors said in an operation update.

In South Africa, operating conditions were challenging largely due to lower local vehicle production at South African manufacturers caused by weaker export demand and market share shifts due to the influx of imported vehicles, especially from China and India.

In addition, results were impacted by reduced production volumes at a major customer, Toyota South Africa Motors, due to engine certification issues - TSAM resolved these issues in the fourth quarter.

In Türkiye, interest rates increased to 50% during the year, and the annual inflation rate peaked at 75% before dropping to 44.4% in December.

Automotive batteries sold in the group Energy Storage businesses, Rombat in Romania and First Battery in South Africa, improved by 10%, up 405 000 units to 4.3 million units, supported by stronger export sales volumes.

Group revenue from continuing operations was resilient despite the toough market and was expected to be R11.8 billion compared to R12.1bn the year before.

Earnings before interest and tax (EBIT) of continuing operations were expected to be between R480 million and R520m from R633m in 2023. A restructuring of non-core operations, such as First Battery's Industrial business and Alfred Teves Brake Systems' manufacturing line, had a temporary impact on EBIT.

The Automotive Components Vertical revenue was expected to decline 8% to R7.2bn. Production capacity and shift patterns were being adjusted to match demand.

In December, the group acquired AutoZone for R278.5m, which represented a strategic shift to diversify revenue streams and gain access to new markets. Integration and the identification of synergistic opportunities were underway.

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