JSE-listed automotive parts and vitality storage options producer Metair Investments is to take a position greater than R700 million in its automotive parts enterprise in South Africa this yr, most of it associated to the availability of parts for the brand new Ford Ranger.
This features a additional R165 million to localise the automotive copper wire utilized by Hesto Harnesses.
Metair CEO Riaz Haffejee stated on Thursday solely the primary a part of this challenge, involving the primary grade of wire and affordable volumes, has been authorised.
He stated additional approvals can be required for various grades of wire, which can then imply it will possibly put money into the equipment and tools for Unitrade, Metair’s automotive cable and wire subsidiary.
“We then have to construct a brand new facility for that, which would be the fifth facility we ultimately construct for this challenge,” he stated.
Metair chief monetary officer Sjoerd Douwenga confirmed the group is investing a complete of R1 billion within the Ford Ranger challenge.
Haffejee stated R600 million of the allotted capital expenditure for the Ford Ranger challenge was spent in 2021, with R250 million delayed into the 2022 monetary yr.
“It’s a challenge that impacts 4 of our automotive part firms as new enterprise and one other two as substitute enterprise. The client is intending to extend quantity alongside the way in which and never simply usher in a brand new mannequin with nice export potential.”
“We’ve had important extra income secured over the mannequin life because of the challenge maturing and because of new potential enterprise secured from numerous of our subsidiaries,” he stated.
Haffejee stated the Ford Ranger challenge is anticipated to create greater than 3 000 new jobs in Metair and enhance the corporate’s head depend in South Africa by about 50%.
He stated these are everlasting jobs throughout all Metair firms, with the bulk being employed in 2023 and extra employed as volumes of the brand new Ford Ranger enhance.
Andrea Cavallaro, director of operations at Ford’s Worldwide Markets Group, stated final yr a complete of R20.13 billion is to be invested in South Africa by the Ford Motor Firm and its suppliers for the manufacturing of the brand new Ranger and a bakkie for Volkswagen at Ford’s meeting plant in Silverton in Pretoria and the adjoining Tshwane Automotive Particular Financial Zone (TASEZ).
Cavallaro stated the funding will create 1 200 new jobs on the Silverton plant to extend Ford’s workforce to five 500 on the plant and add an additional 10 000 jobs to the already 50 000 jobs throughout Ford’s native provide community.
Manufacturing of the brand new Ford Ranger is scheduled to begin within the fourth quarter of this yr.
The R1 billion funding by Metair consists of investments in:
A warehouse facility within the TASEZ subsequent to Ford SA’s manufacturing plant in Silverton, the place the wiring harnesses can be sequenced for the Ford plant.
A brand new facility for Automold within the TASEZ to produce plastic injection molding elements to the Ford plant.
A brand new warehouse for Lumotech, which manufactures headlights, tail lights, reflectors and plastic injection mouldings.
Whole capital expenditure of R1.2 billion is deliberate by Metair in its 2022 monetary yr in comparison with R1.3 billion in 2021.
It consists of carry over allocations from 2021 and new expertise investments at Mutlu Akü in Turkey in absorbent mat glass stop-start battery expertise.
Haffejee stated Metair has made regular progress towards its strategic initiatives in its 2021 monetary yr, which resulted within the firm delivering a file efficiency and persevering with to show its resilience in an surroundings that remained constrained by the results of Covid-19.
Power storage enterprise
He stated the vitality storage enterprise carried out exceptionally effectively, and forward of its restoration plan, by capturing all spherical will increase in market demand.
Haffejee famous that the restoration within the automotive parts enterprise was extra protracted with the sturdy development in buyer volumes within the first half not repeated within the second due to provide chain-related disruptions and different once-off manufacturing interruptions.
“Our strategic tasks, together with enlargement works at Hesto, are on monitor, enabling us to construct out the capability to assist our present and future development.
“OEM [original equipment manufacturer] manufacturing is anticipated to develop with an elevated deal with native manufacturing and I’m assured that our ongoing investments will ship returns and drive significant worth creation over the brief to long run,” he stated.
Metair on Thursday reported a 23% enhance in group income to R12.62 billion within the yr to end-December 2021.
Haffejee stated this displays the stable rebound following lockdown restrictions in 2020.
Group working revenue rose to R1.16 billion from R0.6 billion, with the working margin bettering to 9.2%, from 5.5% in 2020.
Earnings earlier than curiosity, tax, depreciation and amortisation (Ebitda), plus fairness earnings and impairments, elevated by 80% to R1.4 billion. Headline earnings per share grew by 139% to 354 cents from 148 cents.
An improved dividend of 90 cents per share was declared. A dividend of 75 cents was declared in 2021.
Haffejee stated there are potential challenges in Jap Europe due to the Russia-Ukraine battle however Metair is holding an in depth eye on the state of affairs and it has not had any nice influence to this point.
He stated the potential influence is small as a result of Metair is taking a look at mitigating these issues.
“We’ve exports into Russia, Moldova, Ukraine and Belarus and lengthy standing prospects within the area from each Mutlu and Rombat. In complete, they kind between 6% and seven% of complete quantity for Mutlu and Rombat.
“We do have potential prospects that we will discover in different markets in North America and South America. To mitigate this difficulty we now have paid much more consideration to these alternatives.”
Impartial Securities CEO Simon Fillmore stated Metair appears very effectively positioned going ahead when it comes to development, particularly with regard to the investments made for the Ford Ranger contract.
“They’ve grown their steadiness sheet, made the capex however haven’t seen any return come from that and we’ll begin seeing that come by means of from subsequent yr.
“I feel within the subsequent three to 5 years the corporate goes to have a really first rate development profile and it’s buying and selling at a really modest valuation for that. So we predict the enterprise is pretty engaging on that foundation,” he stated.
Shares in Metair rose 5.91% on Thursday to shut at R27.79 per share.
Take heed to Fifi Peters’s interview with Metair CEO Riaz Haffejee (or learn the transcript here):