Metair Investments (MTA) H1 2024 earnings summary

Executive summary

• Revenue rose 4% year-over-year to R8 billion, but EBITDA fell 27% to R385 million due to hyperinflation in Türkiye, with headline earnings per share dropping to a 3 cent loss from 41 cents in H1 2023.

• The sale of Mutlu Akü for $110 million is expected to significantly reduce group debt, operational risk, and volatility, with proceeds to be used for debt reduction.

• Hesto achieved a turnaround, moving from a R711 million loss to a R112 million operating profit and a 3.9% EBIT margin in H1 2024.

• Leadership has stabilized, with a renewed focus on automotive components, African mobility, and energy sector diversification.

Financial highlights

• Group operating profit declined 59% to R134 million, with margins dropping to 1.7% from 4.2% in the prior period.

• Net finance charges surged 59% to R446 million, mainly due to high Turkish interest rates and Mutlu's debt.

• Net asset value per share improved to R29 (2,923 cents), mainly due to asset indexation from Mutlu.

• Headline earnings per share swung to a 3 cent loss; normalized EPS (excluding hyperinflation) would be 37 cents.

• Net debt increased to R3.4 billion (excluding Mutlu), with net debt to EBITDA at 3.5x.

Outlook and guidance

• Mutlu Akü disposal will remove hyperinflation and high interest costs, reducing group debt and risk, with a focus on cost efficiency and cash generation at Hesto.

• Vehicle production volumes in South Africa are expected to remain below 600,000 units for the year.

• New strategy to be approved by November 2024, focusing on African mobility, energy, and aftermarket diversification.