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Metair [JSE:MTA] has moved to allay investors’ fears as many industries are still trying to quantify what the impact of coronavirus and anticipated global recession will be on them.
The company, which is the leading car component manufacturer in the country, said while vehicle production volumes for 2020 are forecast to decline, and the automotive industry needs to move swiftly to mitigate long term effect due to the coronavirus, the long-term outlook still looks bright.
Metair said for it specifically, this year comes with a number of exciting opportunities.
"Metair group companies have been successful in securing major contracts arising from the new vehicle launches planned to service the export and local markets over the next three years," the company said in a commentary accompanying its 2019 results that were published on the Stock Exchange News Service on Wednesday morning.
Jobs, jobs, jobs
The group said almost all its subsidiaries were awarded contracts to supply different parts for new vehicles. But its KwaZulu Natal-based manufacturing subsidiary, Hesto Harnesses, scored the biggest, securing a contract that could see it employ 3 200 more people with a capital investment of approximately R500 million. The company projected that the planned investment at Hesto Harnesses would secure turnover of between R12 billion and R14 billion for the group over a period of seven years.
"The final impact will depend on model launch volumes that are under discussion with customers and would be disclosed to the market when finalised. This job creation opportunity made possible by the deepening local content requirements and the Automotive Production and Development Programme, is positive both for Metair and for the country,” added the group.
Surge in exports
In 2019, the automotive components business increased turnover by 11.3% to R5.6 billion on as export volumes surged and car manufacturers used more local components in new cars. The division increased its profit before interest and tax contribution to the group by 5.7% to R538 million.
Metair said the entire South African automotive industry has the opportunity to enter "an exciting growth phase" this year because of major trend shifts, including the deepening of localisation of car components. But it said South Africa's government needs to help the industry protect its market access.
"Government needs to carefully consider its position regarding legislation like the Copyright Amendment Bill that will weaken our standing in the protecting of intellectual property rights. This could bring about a review of the special access South Africa has into the US under the generalised system of preferences and Africa Growth and Opportunity Act."
The group’s energy storage business its turnover by 26.3% and its profit went up 5.7% in local currency due to strong aftermarket demand and growth in exports.
Compiled by Londiwe Buthelezi
