Our opinion on the current state of MTA

Metair (MTA) produces energy solutions (batteries) and components for the vehicle manufacturing business. It has operations in Africa and in various European and Middle East countries. The company's energy storage business is located in Turkey in an operation called "Mutlu". The business it is in has the prospect of growing rapidly as electric motor vehicles replace those powered by internal combustion engines. The company has announced its intention to split into its European acid battery business and its automotive components business in South Africa.

In a report on the impact of the floods in Natal, the company said, "Whilst the impact on Metair’s facilities was minimal and operations had promptly returned to normal, a major Original Equipment Manufacturer (OEM) customer of the Group advised that it suffered significant damage to its plant with production suspended for clean-up operations and assessments to be carried out." The company received a R150m insurance pay out for business interruption from the Natal floods.

In its results for the six months to 30th June 2023, the company reported revenue up 31% and headline earnings per share (HEPS) down 9%. The company's net asset value (NAV) increased 3% to 2615c per share. The company said, "Group revenue increased 31% to R7.6 billion (H1’22: R5.8 billion), reflecting the recovery in local OEM volumes following the KZN floods and the resulting loss of sales to the group’s key customer in FY’22. The group also commenced mass production and volume ramp-up for new customer vehicle models, most notably for FMCSA (“Ford”). Group operating profit increased by R180 million to R324 million (H1’22: R144 million) and operating margin improved to 4.2% (H1’22: 2.5%)."

In a trading statement for the year to 31st December 2023, the company estimated that HEPS would be between 128c and 140c compared with a loss of 17c in the previous year. The company said, "South African OEM production volumes grew 20% from 2022, improving top-line growth in the Group's automotive components business. Automotive battery volumes sold in the Energy Storage Vertical declined 17% from 8.7 million to 7.3 million units, mainly due to the loss of export volumes primarily in Mutlu Akü."

The share has been falling since October 2021 and the recent results appear to have accelerated that fall. We recommend waiting for a break up through its downward trendline before investigating further. On 22nd March 2023, the company announced that its CEO, Riaz Haffejee, would resign with effect from the end of that month. On 6th December 2023, the company announced that its CEO, Sjoerd Douwenga, would resign with effect from 31st January 2024 due to ill health.