Metair Investments (MTA) H2 2024 earnings summary

Executive summary

• Navigated a challenging year marked by OEM production declines, port infrastructure issues, increased imports, and hyperinflation in Turkey impacting Mutlu.

• Undertook significant restructuring, including plant closures, strategic exit from Mutlu, and closure of non-core operations, incurring ZAR 41 million in restructuring costs.

• Acquired AutoZone, shifting focus toward aftermarket sales to reduce OEM dependency and diversify revenue streams.

• Achieved a turnaround at Hesto, moving from a ZAR 608 million EBIT loss to a ZAR 257 million profit.

• Strengthened management team and shifted to an operating company structure with new verticals in manufacturing and aftermarket parts.

Financial highlights

• Revenue from continuing operations declined 2% year-over-year to ZAR 11.8 billion.

• EBITDA decreased 8% to ZAR 844 million, impacted by ZAR 41 million in restructuring costs.

• EBIT from continuing operations increased 28% to ZAR 603 million, but operational EBIT declined 20% to ZAR 504 million after adjusting for capital items.

• Net profit from continuing operations rose to ZAR 282 million from ZAR 55 million in the prior year.

• Headline earnings per share (HEPS) declined to ZAR 0.89 from ZAR 0.98.

• Free cash flow improved to ZAR 776 million from ZAR 306 million.

• Net asset value per share dropped to ZAR 13.88, mainly due to the loss on Mutlu.

• Net debt to EBITDA increased to 3.2x (3.4x on covenant basis), up from 2.6x.

• ROIC declined to 7.1%, below the weighted average cost of capital.

Outlook and guidance

• No major volume increases expected from automotive OEM customers over the next two years; budgeting conservatively.

• Growth focus is on expanding aftermarket revenue, targeting a long-term goal of up to 50% of group revenue.

• AutoZone integration and turnaround are critical priorities, with expectations to exceed breakeven in 2025.

• Continued focus on cost reduction, operational efficiency, and capital discipline.

• Emphasis on expanding in Sub-Saharan Africa and consolidating Hesto from April 2025.