Story audio is generated using AI
Metair reported that it has completed a two-and-a-half-year restructuring programme that has strengthened its balance sheet and positioned the automotive components manufacturer for growth despite continued pressure on South Africa’s vehicle manufacturing industry.The automotive components manufacturer on Monday said the overhaul included cost reductions, plant restructuring, and the integration of Hesto, its automotive wiring harness business, acquired in 2025.“The strategic reset is substantially complete, the balance sheet has stabilised, and, as a result, the group’s overall risk profile has improved,” Metair said in a trading update for the six months to end-June.The turnaround follows the refinancing of its R3.3bn South African debt package in April, extending its maturity by five years while lowering financing costs.Metair expects HEPS from continuing operations to increase 3%-11% in the first half, while earnings per share are forecast to recover to 65c-75c after a loss of 90c in the previous comparable period.Revenue is expected to be marginally higher than the R8.5bn reported a year earlier despite lower volumes from one of its key original equipment manufacturer (OEM) customers, which were partly offset by higher volumes from other customers. Earnings before interest and tax are also expected to improve modestly, supported by cost-saving initiatives, operational efficiencies and the full six-month contribution from Hesto.The outlook comes despite domestic vehicle production remaining subdued. Although South Africa’s new vehicle sales rose 12.9% in the first six months of the year, recording the strongest June in 19 years, most of the growth came from imported Chinese and Indian brands rather than locally manufactured vehicles. Vehicle exports fell 7.8% over the period.The OEM division is expected to increase revenue 3%-6% while maintaining slightly higher operating margins through efficiency improvements.The aftermarket business is also expected to improve, with revenue forecast to grow 5%-7% as AutoZone’s turnaround gains traction. Though earnings are expected to remain broadly flat because of difficult trading conditions, AutoZone returned to profitability from May, while Rombat, the group’s Romanian battery business, is expected to maintain earnings despite a 20%-25% drop in revenue.“AutoZone’s turnaround remains a near-term priority and it is already showing signs of improvement,” the group said.Metair said it is engaging prospective new automotive manufacturers on localisation opportunities but warned policy support remains critical to the sector. Restructuring at First Battery triggered a National Union of Metalworkers of South Africa strike in July, which has since been suspended while outstanding issues are being negotiated. The group is maintaining an appeal of a €20.2m fine imposed on Rombat last year, which has already been fully provided for.“Strategic government decisions in the near term are pivotal to sustaining and growing production levels, with greater collaboration needed to improve the competitiveness of local manufacturing, support localisation and protect and diversify export markets,” the group said.Metair is expected to publish its interim results on August 26.
