Metair able to navigate Russia-Ukraine conflict using Covid-19 lessons, says CFO

Sjoerd Douwenga explains that Metair’s experience will provide a buffer against ongoing supply chain challenges.

Like many organisations, Metair has had to navigate the challenging trading environments that resulted from the Covid-19 pandemic. And while the group has seen its best ever results for the year ended 31 December 2021, the supply chain challenges and semiconductor shortages have both been compounded by the conflict in Russia and the Ukraine.

The international motor component group sells a small volume of batteries to the after-part market and to a vehicle manufacturer (OEM) in Russia. The OEM is currently closed because of the conflict and Metair is monitoring the situation while working to find alternative markets for those volumes.

However, the group is ready for the challenge, as they were forced to spend some R150 million on airfreight due to the issues presented by Covid-19. The group also started holding bigger inventories to mitigate shipping delays and freight costs, resulting in net working capital increasing 18 percent to R2.2 billion.

“We have financing facilities in place to support operations, as well as our expansion programmes, and our strategic build-up of inventory will provide a buffer against ongoing supply chain challenges,” explained CFO Sjoerd Douwenga.

Reflecting on the results, he said that the record headline earnings per share of 139 percent was boosted by strong recovery in Metair’s energy storage business, which mitigated the impact of supply chain shortages.

“The Energy Storage vertical performed ahead of its recovery plan and auto battery sales increased 18 percent to 8.8 million units, with revenue of R7.6 billion showing the same level of increase. The volumes beat 2019 levels, supported by strong after-market demand and exports from Mutlu Akü in Turkey.”

Overall, the group revenue increased 23 percent to R12.62 billion, with operating profits also up 107 percent to R1.16 billion. Metair also lifted its dividend by 20 percent to 90 cents.

For this year, Metair will be investing over R1 billion in expansion, maintenance, and health and safety.

According to the company, capex allocated for the automotive components vertical had increased to invest in planned new business, and new model launches and facelifts. Volume outlook for the energy storage vertical remains positive given increased demand for absorbed glass mat batteries across all channels.