July 28, 2022: Lead and lithium group Metair has reported strong production and sales of automotive batteries across the countries that mostly comprise its battery businesses, in a voluntary half-year update issued on July 20.
But the company told the Johannesburg Stock Exchange its formal interim results announcement will be delayed until around September 14.
This is because the firm will review figures in relation to its Mutlu Akü batteries operation in Turkey — which has been designated a hyperinflationary economy by the International Monetary Fund and leading accounting firms.
Mutlu Akü accounted for nearly ZAR4 billion ($237 million) of Metair’s turnover in the financial year ended December 31, 2021. The company said this represented about 31% of group turnover while 55% “was directly linked to hard currencies (US dollars or euros) through direct export and OEM sales, growing both volumes and price in the first half of 2022”.
Metair said it was reviewing the impact on its results of International Accounting Standard 29, which provides guidance on financial reporting on currencies of hyperinflationary economies.
However, Metair said its energy storage division, which includes Mutlu Akü, Rombat in Romania and First National Battery in South Africa, continued to perform well despite tough operating conditions including high energy and labour costs in Europe and Turkey.
Demand for lead acid batteries remained strong in all markets, especially in Turkey, despite the hyperinflationary economy classification for accounting periods ending on or after June 30, the company said.
Cumulative inflation rates in Turkey over a three-year period exceeded 100% as at April 2022, Metair said.
Export sales are earned in hard currency and provide a natural hedge to limit the impact of foreign exchange volatility and inflationary pressures, Metair said.
Meanwhile, Mutlu Akü will be the driving force behind an expected overall group production total of around four million automotive batteries produced in the first half of 2022, Metair said.
The Turkish operation increased its export volumes by more than 40%, compared to the six-month period ended June 30, 2021, despite a 10-day labour wage strike at Mutlu Akü during June, which has been settled.
Production from Rombat is expected to be at least 10% lower than the year-ago period, mainly because of “dampened consumer confidence” from the Russia-Ukraine conflict.
In results for the past full year reported on March 17, the company posted increases in revenue and operating profit as its businesses, which include automotive components, generated a 23% increase in overall revenue from the previous year to ZAR12.62 billion.