Metair Investments Limited · JSE:MTA
Metair Investments — H1 2023 Earnings Presentation
43 slides from Metair Investments's earnings presentation, 2023
Slide 1: 2023 Interim Results Presentation
2023 INTERIM RESULTS PRESENTATION
Slide 2: Agenda
AGENDA 2 • Welcome • Leadership message • Financial and operational review • Outlook and conclusion • Q&A • Appendices
Slide 3: Leadership Message
METAIR INVESTMENTS LIMITED ‘automotive | industrial | retail
Slide 4: Inaugural Message from the CEO – State of Metair
INAUGURAL MESSAGE FROM THE CEO – STATE OF METAIR 4 Excited to lead a highly capable team, on the cusp of significant change and with opportunity on the horizon Key focus areas METAIR VISION Operational Excellence Become a leading • Operational stability, efficiency, competitiveness and management ca
Slide 5: Inaugural Message from the CEO – State of Metair
INAUGURAL MESSAGE FROM THE CEO – STATE OF METAIR 5 Business stability, operational efficiency and global competitiveness Leadership expansion • Metair automotive operations executive assigned to Hesto Harnesses (“Hesto”) • COO appointment from outside Metair, an executive OEM manufacturing leader •
Slide 6: Inaugural Message from the CEO – State of Metair
INAUGURAL MESSAGE FROM THE CEO – STATE OF METAIR 6 Strategy and critical success factors Automotive Components (South African production) Energy Storage (SA, Türkiye, Romania, UK, Kenya) • Metair companies currently well placed to meet customer • OEM and aftermarket performing well under current req
Slide 7: H1'23 Key Takeaways
H1’23 KEY TAKEAWAYS 7 Operating environment remains challenging over H1 23, with Metair focused on the launch and ramp-up of the largest single project in our history across 4 major subsidiaries. The recent loss of volumes in Energy Storage to the Russia and USA has added short-term strain to the sy
Slide 8: Financial and Operational Overview
FINANCIAL AND OPERATIONAL OVERVIEW
Slide 9: 2023 Interim Results Salient Features
2023 INTERIM RESULTS SALIENT FEATURES 9 Significant launch complexities at Hesto, supported by strong underlying operational performance across both business verticals within a challenging operating environment OPERATING CASH GENERATED REVENUE EBITDA** NET DEBT FROM FREE CASH FLOW PROFIT increased 3
Slide 10: Financial Overview
METAIR INVESTMENTS LIMITED ‘automotive | industrial | retail
Slide 11: Financial Overview: Income Statement
FINANCIAL OVERVIEW: INCOME STATEMENT 11 Revenue and operating profit growth supported by strong local automotive volume recovery and improved Mutlu performance. The impact of hyperinflation was less severe than H1’22 but interest rates (borrowing costs) were higher R'million Dec 2022 Jun 2022 Jun 20
Slide 12: Financial Overview: Balance Sheet
FINANCIAL OVERVIEW: BALANCE SHEET 12 High net debt and working capital levels will unwind into FY’24. Strong Mutlu non-monetary asset base protects NAV against hyperinflation impacts R'million Dec 2022 Jun 2022 Jun 2023 Non-current assets 5 341 5 145 5 477 Property, plant and equipment 3 771 3 449 3
Slide 13: Working Capital Increased to Support Higher Activity Levels
WORKING CAPITAL INCREASED TO SUPPORT HIGHER ACTIVITY LEVELS 13 • Net working capital increased 17% to R3.7bn • Supporting turnover growth in both business verticals R'million Dec 2022 Jun 2022 Jun 2023 and customer volume outlook Inventory 2 689 2 808 3 071 Trade and other receivables 2 875 2 131 3
Slide 14: Net Debt Analysis (Including Hesto at 100%)
NET DEBT ANALYSIS (INCLUDING HESTO AT 100%) 14 • Net interest costs up 125% to R280m › Increased cost of borrowings, especially Türkiye › Turkish market rates vary between 40% - 50% pa › Turkish market funding limited to between 2-6 months › High group net working capital › Peak debt, investing in f
Slide 15: Capital and Debt Structure, Including Funders Covenants
CAPITAL AND DEBT STRUCTURE, INCLUDING FUNDERS COVENANTS 15 Covenants, on a reported basis, are not in compliance. However, we comply with covenants on an adjusted (or normalised) basis. Our funders remain supportive and covenant ratios will be adjusted to accommodate current positions % Dec 2022 Jun
Slide 16: Assessing Underlying Performance: Normalising the Result
ASSESSING UNDERLYING PERFORMANCE: NORMALISING THE RESULT
Slide 17: Normalised Perspective
NORMALISED PERSPECTIVE 17 On a normalised earnings basis, group EBITDA declined from R743m to R610m mainly due to Hesto ramp up complexities. Covenant pressure is isolated to Hesto and has been rectified since
Slide 18: Normalised Operating Profit (PBIT)
NORMALISED OPERATING PROFIT (“PBIT”) 18 Excluding Hesto’s loss of R711m, earnings were robust considering major customer launch, Rombat’s challenging environment and Turkish Lira devaluations and hyperinflation impacts Automotive Components Group and Energy Storage
Slide 19: IAS 29, Hyperinflation Accounting
IAS 29, HYPERINFLATION ACCOUNTING
Slide 20: Non-Cash Hyperinflation Impact
NON-CASH HYPERINFLATION IMPACT 20 IAS 29 increases Mutlu’s non-monetary assets by c.22% (R1.9bn), using CPI tables since acquisition. A foreign currency translation gain of c. R1.8bn arises through other comprehensive income. Mutlu operating profit ‘re-expressed’ as a financial gain of R180m (H1’22
Slide 21: Operational Overview
METAIR INVESTMENTS LIMITED ‘automotive | industrial | retail
Slide 22: Business Vertical Overview – IFRS Reported
BUSINESS VERTICAL OVERVIEW – IFRS REPORTED 22 ENERGY STORAGE Energy VERTICAL Storage vertical H1 2022 H1 2023 H1 2022 H1 2023 H1 2022 H1 2023 R3.7bn R3.7bn R2.7bn R6.6bn R5.8bn R7.6bn Revenue 58% 36% 42% 64% contribution 0.3% contribution contribution 147% contribution 31% Operating (R44m) R121m R18
Slide 23: Group Operating Profit (PBIT) Analysis
GROUP OPERATING PROFIT (“PBIT”) ANALYSIS 23 Group operating profit increased R180m driven by Mutlu but negated by high interest costs. BI insurance claim of R259m was included within operating profit in H1’22
Slide 24: Business Vertical Overview - Normalised
BUSINESS VERTICAL OVERVIEW - NORMALISED 24 ENERGY STORAGE Energy VERTICAL Storage vertical H1 2022 H1 2023 H1 2022 H1 2023 H1 2022 H1 2023 R3.6bn R4.0bn R2.7bn R6.6bn R5.7bn R7.9bn Revenue 57% 38% 43% 64% contribution 13% contribution contribution 147% contribution 40% Operating R307m R291m R299m R4
Slide 25: Automotive Components (Including Hesto)
AUTOMOTIVE COMPONENTS (INCLUDING HESTO) 25 Key customer volumes up 21%, ahead of market volumes of11%. Hesto incurred an operating loss of R711m, impacted by significant manufacturing complexities during the Ford model launch Revenue PBIT EBITDA 147% 344% 197% R6.6bn (R448m) (R283m) Free cash PBIT %
Slide 26: Energy Storage Operational Performance
ENERGY STORAGE OPERATIONAL PERFORMANCE 26 Energy Storage Auto volumes declined 10% to 3.6m units due to lower exports. R3.7bn revenue generated and reported profit up 374% to R121m. On a pre-hyper (normalised) basis, Auto operating profit increased 15% to R315m, but industrial segment incurred a los
Slide 27: Energy Storage Vertical - Segment Analysis
ENERGY STORAGE VERTICAL - SEGMENT ANALYSIS 27 Reported Pre-hyperinflation 152 315 200 350 273 (4.4%) (8.5%) 300 (8.3%) 150 Operating 250 R’million R’million 100 200 Profit ( 29) ( 15) ( 31) 150 50 0 (24) (“PBIT”) (-0.8%) (-5.4%) (-9.6%) 100 0 50 (-0.1%) (-7.1%) 0 -50 -50 H1'22 H1'23 H1'22 H1'23 Auto
Slide 28: Capital Expenditure and Commitments (Including Hesto)
CAPITAL EXPENDITURE AND COMMITMENTS (INCLUDING HESTO) 28 Initially R750m allocated for FY’23 (FY’22: R1.4bn), includes new technology investments and localisation projects • R316m of approved spend was undertaken in the year Capital expenditure spend Vertical Maintenance Efficiency Health, safety •
Slide 29: Ford Project Update
METAIR INVESTMENTS LIMITED ‘automotive | industrial | retail
Slide 30: The Project Was Successfully Launched in the Group
THE PROJECT WAS SUCCESSFULLY LAUNCHED IN THE GROUP 30 Start of production and ramp-up was more challenging than planned due to product complexities. We still expect revenue greater than R60 billion over the project life and future profitability remains within expectations Category of spend (R'millio
Slide 31: Outlook and Conclusion
METAIR INVESTMENTS LIMITED ‘automotive | industrial | retail
Slide 32: Concluding Remarks
CONCLUDING REMARKS 32 Outlook for the group remains positive, short-term impacts on earnings and balance sheet can be managed and we continue to receive support from our main funders • New investments will drive market share growth of local OEM production in SA Automotive Components • Relationships
Slide 33: Metair
METAIR INVESTMENTS LIMITED ‘automotive | industrial | retail
Slide 34: Appendices
METAIR INVESTMENTS LIMITED ‘automotive | industrial | retail
Slide 35: Energy Storage Volumes Last Twelve Months (LTM)
ENERGY STORAGE VOLUMES LAST TWELVE MONTHS (“LTM”) (ROUNDED) 35 1. Total volumes by operation (including 2. Automotive volumes by channel 3. Mutlu automotive volumes industrial) 4. Rombat automotive volumes 5. First Battery automotive 6. Industrial volumes volumes
Slide 36: Combined Battery Volumes: First Battery, Mutlu and Rombat
COMBINED BATTERY VOLUMES: FIRST BATTERY, MUTLU AND ROMBAT (ROUNDED) 36 Battery units ('000) Dec 2022 Jun 2022 Jun 2023 Change % Change Automotive original equipment 2 487 1 232 1 338 105 9% Original - Local 1 900 974 1 074 99 10% equipment - Export 587 258 264 6 2% Automotive aftermarket 6 238 2 759
Slide 37: First Battery Volumes
FIRST BATTERY VOLUMES 37 FNB Battery units ('000) Dec 2022 Jun 2022 Jun 2023 Change % Change Original Automotive original equipment 361 177 181 4 2% equipment - Local 361 177 181 4 2% Automotive aftermarket 1 185 604 684 80 13% - Local 922 467 507 40 9% Aftermarket - Export 263 137 177 40 29% Total
Slide 38: Mutlu Battery Volumes
MUTLU BATTERY VOLUMES 38 Mutlu Battery units ('000) Dec 2022 Jun 2022 Jun 2023 Change % Change Automotive original equipment 1 645 808 894 86 11% Original - Local 1 149 550 751 201 36% equipment - Export 496 258 143 (115) (45%) Automotive aftermarket 3 258 1 271 868 (403) (32%) Aftermarket - Local 1
Slide 39: Rombat Battery Volumes
ROMBAT BATTERY VOLUMES 39 Rombat Battery units ('000) Dec 2022 Jun 2022 Jun 2023 Change % Change Automotive original equipment 481 247 263 16 6% Original - Local 390 247 142 (105) (43%) equipment - Export 91 121 121 Automotive aftermarket 1 795 884 695 (190) (21%) Aftermarket - Local 429 131 95 (36)
Slide 40: Vehicle Production per OEM in South Africa
VEHICLE PRODUCTION PER OEM IN SOUTH AFRICA 40 OEM 2017 2018 2019 2020 2021 2022 Jun 2022 Jun 2023 % Change TSAM 128 578 139 307 138 781 103 461 128 223 115 327 49 523 76 272 54% FMCSA 93 817 105 099 94 756 65 503 87 174 92 166 49 088 59 244 21% VW SA 108 156 133 543 157 961 114 158 129 119 134 864 6
Slide 41: Vehicle Production per OEM in Türkiye
VEHICLE PRODUCTION PER OEM IN TÜRKIYE 41 OEM 2017 2018 2019 2020 2021 2022 Jun 2022 Jun 2023 Oyal Renault 365 002 336 778 342 777 308 568 248 000 247 100 92 498 152 500 Ford 373 005 373 702 369 035 327 936 348 029 376 476 191 217 213 184 Tofaş 384 174 301 750 264 196 250 630 228 544 263 747 118 272
Slide 42: Vehicle Production per OEM in Romania
VEHICLE PRODUCTION PER OEM IN ROMANIA 42 OEM 2017 2018 2019 2020 2021 2022 Jun 2022 Jun 2023 Renault Dacia 313 883 335 262 349 528 259 199 257 405 314 228 165 350 172 160 Ford 49 771 141 507 140 884 179 008 163 350 195 237 103 409 96 928 Total 363 654 476 769 490 412 438 207 420 755 509 465 268 759
Slide 43: Disclaimer
DISCLAIMER 43 The information supplied herewith is believed to be correct but the accuracy thereof at the time of going to print is not guaranteed. The company and its employees cannot accept liability for loss suffered in consequence of reliance on the information provided. Provision of this data d