Metair Investments’ auto part and battery manufacturing operations are performing well through the fourth quarter to December 31 in spite of a challenging operating environment that includes ongoing supply chain shortages.
The group said in an operational update yesterday that key projects in the Automotive Component Vertical are on track and, for instance, production of the major new model investment, the next-generation Ford Ranger, started on November 16 at Ford’s Silverton assembly plant, and Metair subsidiaries had entered production with peak production planned from January 2023.
“The vertical expects to incur pre-production and engineering (project) cash costs of up to R475 million related to the new model in 2022.”
Projects were still on track despite semiconductor shortages and shipping constraints, including Transnet port disruptions.
The Energy Storage Vertical was delivering strong automotive battery volumes and revenues, despite the Turkish and Romanian operations navigating short-term inflationary cost pressures and the war in Ukraine.
Inflation in Turkey rose dramatically during the first half - the annual inflation rate reached 85.5% in October 2022.
Nevertheless, subsidiary Mutlu Akü remained resilient with management interventions yielding positive results, Metair’s directors said.
The temporary suspension of production at Toyota South Africa Manufacturing following flooding in KwaZulu-Natal in April 2022 impacted the South African operations significantly, but production levels resumed in September and stabilised at pre-flood levels.
A business interruption insurance claim progressed well, with R400m cash received. The total claim was capped at R500m and was expected to be finalised in January 2023, with the final claim under review by the insurers.
Raw material shortages, supply chain delays and the loss of Toyota SA production time had impacted Original Equipment Manufacturer (OEM) volumes.
While there was a degree of uncertainty around the short-term volume fluctuation for the remainder of the year, volume expectations over the model lives remained unchanged.
“Metair expects 2022 industry OEM production volumes to be ahead of 2021 volumes, at 550 000 cars, which represents 90% of 2019 (pre-Covid) volumes.”
Metair expected OEM production volumes would likely progressively rise to more than 700 000 from 2023, subject to supply chain stability.
In the energy vertical, automotive battery volumes sold were expected to reach between 8.5m and 9m units for the year, as Mutlu Akü export volumes were expected to increase by at least 17% from 2021.
Volumes from Rombat were expected to be 15% lower due to dampened consumer confidence from the conflict in Ukraine. Sales volumes for First National Battery in South Africa were expected to be flat compared with the 2021 financial year.
BUSINESS REPORT