Metair’s Theo Loock on the drivers behind strong earnings, why he remains bullish on SA

Global energy and automotive manufacturer, Metair, has reported impressive financial results for the interim period ending June 2019. The company's headline earnings per share (HEPS) soared by 21%, reaching 160 cents per share. Additionally, revenue climbed by 19% to R5.3 billion. Amidst a challenging economic landscape in South Africa, Metair managed to excel due to strategic contingencies and proactive measures put in place. In a recent interview, Theo Loock, the Managing Director of Metair, shed light on the factors behind the company's success and its optimistic outlook for the future. Theo Loock attributed the robust performance to several key drivers. He highlighted the company's strong position in the export market, sustained manufacturing capabilities, and a favorable policy environment that has provided clarity and support for capital investments. Metair's focus on higher volume production and the pursuit of opportunities in high-value components have bolstered its competitiveness and profitability. The company's energy division experienced notable growth, particularly in the local aftermarket sector, signaling a diversified revenue stream. In response to questions about currency fluctuations, particularly the depreciation of the South African Rand, Loock emphasized the benefits of a weaker currency for local manufacturing. The shift has enhanced Metair's cost competitiveness, as the company utilizes locally sourced commodities like copper, led, aluminium, steel, and plastic. These factors have helped mitigate the impact of currency volatility and strengthen the company's position in the market. Metair's export strategy has also been instrumental in driving growth, with a focus on niche markets and specialized products. The company's customers, particularly in the commercial vehicle segment, have expanded their export reach, capitalizing on emerging opportunities such as Brexit-related vehicle exports to the UK. This strategic approach has enabled Metair to tap into new markets and diversify its revenue streams. Looking ahead, Metair remains bullish on the prospects for continued growth in the vehicle manufacturing sector. Loock expressed confidence in the structural drivers underpinning future volume expansions, with projections indicating a potential increase from 600,000 to 800,000 vehicles over the next two to three years. The company's partnerships with original equipment manufacturers (OEMs) and the introduction of new vehicle models are expected to drive future growth, reinforcing Metair's positive outlook. Despite the challenging economic conditions in South Africa, Metair has navigated the landscape effectively by leveraging its balanced portfolio and strong aftermarket performance. The company's energy division shows promise for future value creation, particularly through technological advancements such as the transition from lead acid to lithium iron batteries. In conclusion, Metair's success story serves as a testament to strategic foresight, operational excellence, and adaptability in a dynamic market environment. With a clear focus on export expansion, product diversification, and continued investment in technology, Metair is well-positioned to sustain its growth trajectory and weather economic headwinds, paving the way for a brighter future in the energy and automotive sectors.