Metair CEO, Paul O’Flaherty, says the company has adapted to current adverse market conditions as it swung from a loss per share of 90 cents in the 2025 first half-year to basic earnings per share of 70 cents for the interim period to June 30.
O’Flaherty said Metair is now “a materially different business from what it was two and a half years ago” as substantial work has been undertaken to improve its flexibility and adaptability to navigate adverse market conditions by closing loss-making businesses.
“A new refinancing package has also created the runway to execute on the recovery and growth plan, although the debt remains elevated. A new team is in place, a new business model has been implemented, and all major restructuring is substantially complete, subject to market conditions,” he said.
However, local automotive production has remained subdued and uneven across Metair’s customers, although Toyota South Africa invested R10.4 billion into the production of the 9th generation Toyota Hilux.
Although South African vehicle sales for the half-year period grew by 12.9% to 286,000 units, Chinese and Indian imports accounted for most of the growth. South Africa's vehicle exports for the period declined by 7.8%.
“As total sales recovered, the mix tilted sharply toward imports. Locally built vehicles have fallen to under a third of the market,” said Metair.
Furthermore, localisation has remained below industry targets while logistics, energy, and infrastructure constraints are negatively hampering exports.
Metair, however, managed to raise group revenues by 1% to R8.5bn while earnings before interest and taxation (EBIT) increased by a similar margin to R444 million. Headline earnings per share for the period resultantly strengthened by 4% to 71 cents.
The automotive industry company closed the half-year under review with a net debt of R4.3 bn, down from R5bn a year earlier. Cash went up from R143m to R620m.
The half-year was characterised by a “seamless key original equipment manufacturer customer model” changeover, with the segment stabilising at lower levels while exhibiting strong demand.
Conditions for the aftermarket segment remained challenging. Positively though, AutoZone returned to profitability while an appeal was lodged for the Rombat fine, with the first instalment of €4.2m paid this month.
First Battery also faced challenging market conditions against the backdrop of market preference for more affordable batteries. The aftermarket segment, including AutoZone and the battery business, raised revenue by 6% to R1.9bn. Volumes for First Battery increased by 5,000 units to 775,000 units.
Revenues for Hesto plunged by 17% to R2.6bn. Metair said that the accounting for Hesto Harnesses Proprietary as a subsidiary resulted in the recognition of a significant once-off net capital loss of R306m in the first half of the 2025 financial year. This primarily emanated from the recognition of previously unaccounted losses from Hesto as an associate, partially offset by a bargain purchase gain.
“This item has been included in the calculation of earnings per share but excluded from headline earnings per share. Hesto was consolidated for three months from 1 April in the first half of 2025, compared to a full six months in respect of the period ended 30 June 2026,” Metair explained.
In the outlook, Metair's management sees the automotive sector remaining at a critical crossroads, with strategic government decisions needed and pivotal to sustaining and growing production levels.
After Toyota produced higher volumes in the half-year, there are high expectations of further increases, with strong demand seen for the new Toyota Hilux model.
Overall, the diversification strategy continues for Metair as it seeks to grow the aftermarket component and reduce dependence on new vehicle production. The wider African aftermarket segment also provides growth opportunities beyond South Africa.
THE NATIONAL