Metair Investments Limited (MTA) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the Metair Interim Results Presentation. [Operator Instructions] And now I will hand over to our CEO of Metair, Theo Loock; and the CFO, Sjoerd Douwenga, to take us through the presentation.

Good afternoon, everybody. A real welcome to Metair's interim results presentation for the period January to June in 2020. If we can go through the agenda on Slide #2, we will start with the welcoming and opening observations. It is the Metair tradition to thank you for the time that you've given us to attend for the interest that you show and the continued support that we received from you, our stakeholders, in our business. I will then go straight into the salient features. And as you would know, I don't think there's any company in South Africa in 2020 that result commentary is not going to be dominant like this by our COVID commentary, the effect that it had on the business. In Metair, we've also designed a COVID response strategy as we took the pandemic very seriously right from the beginning. We actually had lockdown started already to work on our recovery strategy and our return-to-work plan, but obviously, with a big eye on the health and safety of our employees. Maybe that's where I want to start. We are unfortunate in Metair to have lost 3 of our valued employees tragically to COVID. Although we've had almost up to 300 infections in the business close to a 1,000 employees that's being tracked and been in isolation. But we believe that we responded very well from day one in having a big focus on the health and safety of our employees, but also on the health and safety of the business. And that's been covered in our Metair COVID-19 response strategy that both me and my -- and Sjoerd will go through. We won't touch on all the pillars of our response strategy. The detail is there for you. Just as a reminder, the presentation is on our website, www.metair.co.za, but as far as the presenter informed on the handouts are on the webinar. And we will then do the financial and operational overview of the business that will be extensively covered by Sjoerd because I think that's where the biggest interest at the moment is in understanding and unpacking this result that's been affected by the pandemic. I will focus together with Sjoerd on our recovery plan. We're very fortunate that we do believe that we can show to the market that we have a structural design, U-shape recovery that we can look forward into our business. I will borrow a little bit of a joke here from Sjoerd. He said 2020 is perfect vision, but we've come up with a 2022 vision. And that's even a little bit more perfect because it supports our U-shape recovery. Very different approaches in the recovery for the automotive components business versus the energy vertical, and we will show that how it's panned out in each of those individual verticals of our business. And then we will also talk to you about our strategic review process that we are in. So without any further ado, if you can follow the slides, they tell me I'm in control at the moment. So I will directly go to Slide #4. It's probably one of the results that's filled the most tension that we've ever brought to the market. And it's not negative tension. What I mean by tension is that there's quite opposites in the results. It shows a very, very good result, but it didn't come easily. It came with huge sacrifices. And this is where I want to have a shout out at the beginning of this meeting to every employee in Metair that had to sacrifice from day 1. We believe that the lockdown changed the nature of our employment relationship with our employees. And in a positive and a cooperative way, they agreed with us to immediately take as 50% salary cut. As you would know, a big portion of our fixed structure cost is about ZAR 160 million in salaries and wages on a monthly basis. We took the view from day 1 that we at least want to save 50% of that because we wasn't sure if a lockdown could even be taking examples out of China, taking examples out of the U.K., if it could last for 3 months. And we worked very hard to get about 50% of that from government support. And that's another sort of tension or contrast that in the result, this point number two, although governments forced lockdowns, government also had to come with support, and that support we successfully registered for in the TERS funding and being able to support our employees. But it also didn't come from government, we're very grateful and we also have today in attendance some of our Board members, that our Board members accommodated us to allow us to pay our employees, especially in the initial phases, where government was still struggling to put up the TERS funding, the ZAR 3,500 welfare allowance on a monthly basis. This is where we have a full attending today from a lot of our HR personnel, turning -- tuning into this webcast as well as our health and safety professionals in the businesses, especially the doctors, all the nurses and everybody that run their clinics and all of the HR personnel. They really took great care of our employees, made sure that we have the right communication in place with them. And actually bear the brunt of the return-to-work measures that we had to implement. So to you, a real, real thank you for the special effort and dedications that you did. At time of the used cost saving and that's another thing and that cost saving came at a cost because our employees had to share the risk with us as we invested into our future. Another tension is that during the most difficult period that I've seen Metair go through subsequent to the 2008/'09 financial crisis is that we've managed to secure our biggest future in our contract with Ford, where localization and especially in the post-COVID environment, local supply and concentration of supply from customers is not such a challenge at this moment, and we managed to secure, depending where the final volumes are going to be, between EUR 25 billion and ZAR 28 billion of business for the new products that Ford is going to launch in South Africa. But our shareholders also made a sacrifice. This is quite a technical aspect of our result that Sjoerd will talk to. Although we've declared the dividend, we actually deferred the payment of the dividend as we looked at the solvency and the liquidity of the business. Another sort of contrast in the businesses and you'll see it in one of the slides that I will present that shows the differential on percentage utilization of our capacities between the energy vertical and the automotive components vertical that we had tremendous support from our aftermarket businesses. It didn't go to 0% turnover. We've had fantastic demand in the aftermarket. We managed to get them declared as essential service providers, and that's really been a good diversification for us to support the automotive components business that unfortunately had to go in complete lockdown during the period. So that's another sort of tension, where our strategy proved to be very effective and worked well for us that's also a period that we're doing a strategic review. But we also see the resilience that was brought about because of the strategy that we followed, especially customer product and aftermarket diversification, but also geographical diversification, and Sjoerd will show you very different government responses in the different regions that we take from operating especially, for instance, in Turkey. It's also the most comprehensive result commentary that we've ever brought to the market. We do touch on all stakeholders in the business as we also had to do refinance, the sacrifices by employees, the commitment that we had from everybody, shareholders support and all the interactions, but also to be able to reconnect with our customers. One of our big challenges in the COVID lockdown is that we were temporary disconnected from our employees and from our customers, and we've put a lot of effort in to make sure that we understand that correction and we have some sort of security in our 2020 vision. So I do feel a little bit like a Chameleon. That's one of the first times in our business where we have total focus both on the now but also on the future of the business. And we've been able with the support, and the management teams and the executives and the CEOs of all of the companies are also into this webinar, to all of you, thank you for your tremendous support and focus. All of you probably has done additional years' work in this period to make sure that we bring a good result to the market, secure our future, look at our sustainability, but be also able to execute on the new business that we've got, especially to the Metair team as well. They had an extensive forecast rebudgeting. It went from Forecast 1, Forecast 2, Forecast 2B, 2A, plus all the business modeling that we had to do. And it's probably the period where we've got the biggest vision for clarity on our future 5-year plans, as I say, focusing on the future as well. So it's definitely been one of the most challenging results. But also a very satisfying result. The fact that we could tell the market today that we've got ZAR 70 million of free cash flow in a period that we've lost 27% of our turnover is a very good achievement. Person -- on a personal basis, it's also a sad day for me. I've been having the privilege to serve you, the shareholders and the stakeholders in our business, but also the employees for 15 years. This is my 29th result presentation to the market, but it's unfortunately also my final one, but it's not a farewell, my focus in the future would be in securing the execution of the U-shaped recovery and especially the implementation of the ZAR 1.3 billion capital that our investment committee has approved to secure our future. So if I can go to the next slide. The salient features that we display in Slide #7 speaks to the revenue, the 27% decline in revenue compared to the previous period, reduced EBITDA by 80% to ZAR 139 million. But probably the middle bubble is the one that we're the proudest of, that even in those difficult circumstances, if you include some debtors impairments that we had to do, and we haven't had significant real trading debtors impairment. It's only been ZAR 13 million, but other debtors impairments is in advance that we go more in the execution of an export contract in 2018 to help us to secure exports business for Metair in the year of a very good result for Metair to Eastern America. And because of the mall impairment, if it wasn't for that write-down and the impairments, we would have been at an operating profit. And that thing, for us, that's a tremendous achievement. That's only been supported by the absolute focus of the subsidiaries on cash and cost preservation at the business. Small increase in net debt. It was not the position that we thought we're going to have at the onset of the virus and lockdowns. We managed to focus from reducing capital expenditure and utilization of cash, even a 3-month lockdown that we projected at almost ZAR 900 million, down significantly with everybody's support. And net debt only increased by ZAR 60 million. And as I already said, very positive outcome from us to be able to give you positive free cash flow of ZAR 70 million. We're not declaring, obviously, interim dividend. There is some technical issues around the 2019 dividend -- full year dividend that we declared in March of ZAR 1.20 per share. That dividend is deferred at the moment, but Sjoerd will speak to you specifically when we'll review the solvency and liquidity what is our technical and legal view in regards to the commitment. We do see it as a commercial contractual commitment between us and the shareholders, and that's a matter of when we can pay it and what sort of tests in regards to solvency and liquidity we have to do. On the softer issues, all negotiations in regards to my retirement, departure and consultancy have been concluded. And Metair is progressing very well in the search for the CEO replacement to take the company into the future. Probably one of our biggest challenges is our lithium-ion line commissioning. Unfortunately, that's something that we couldn't do remotely or digitally. There's a lot of business that we've learned, and we adjusted to the new normal on how we can digitally and remotely operate our business but the physical commissioning of a line, the physical production office of their first sales that's been delayed, and we'll obviously get back to it with urgency as soon as it's possible to get the technicians out of Korea to help us set with the sector. And the bottom, I think, speaks to our balance sheet that's very, very strong. Here, the strategic design of Metair was also of utmost importance. As you know, we owned all of our properties, so we didn't have to deal with rental payments. We also didn't have to do like some other companies that did deferred rental payments but now are going to have in future structurally higher cost as they have to catch up with those sort of rental payments. But things lied in our people, and I want to reemphasize it. This crisis has shown us that we've got tremendous strong people. People are experienced and leading management team in our businesses that understand not only their businesses, the industry, but it's also responsive to us as shareholders request on what they need to do to secure the future for us and it comes with the great history of operational experience. So it's been a big operational focus in our business. We're not saying there wasn't any learnings. At the end of the presentation, there's three particular learnings may be that I would like to share with the participants and things that we believe that we could have done better and focused on, but that's only with the Perfect 2020 vision hindsight that we can do it. And our strategic position has been very strong. And with that, I would like to go to the next slide because we thought it will be good for you to understand, especially the second quarter. And the way we've broken it down is compared to our planned budget. So what you will see from this is that our planned revenue for this year was almost at a par or equal level as the 2019 level because our results is 27% down and so is our planned turnover for this year. So it's been sort of plan for plateau for this year as we wait for the launch of the new vehicles to set in for our growth that's planned from 2021, 2022. Very dramatic differential position from a strategic point of view between automotive components in South Africa that South Africa had to go into a complete lockdown in April, and you can see 0% turnover there compared to our planned level. Energy storage because of the essential service qualification, good aftermarket support and the differential lockdown approach, especially in Turkey, that never had a full knockdown, but had many lockdowns that we maintained ourselves at 45%. We've put a lot of hard work and it's part of our response strategy in getting a level 4 approval from Minister Patel and the DTI for our business' participation in the automotive industry in the multi-staged management approach for managing the COVID pandemic. And we would have been able to technically be at 50% in May, even in South Africa. That fact that we had 40% doesn't lie with us. It's actually a challenge that we had with customers in regards to supply into them and also attendees of employees to be able to fulfill their capacity at the maximum and have 50% utilization of the facilities. And because there's a lot of support services that goes with our customers, 50% employee allocation on to sign doesn't give you 50% production capacity. It's actually a little bit of a mismatch, but we managed to achieve 40%. You can see the very good bounce back that we had already in May from the energy storage side, moving from 45% to the 67%. And June looking much better already, even in the automotive components business in South Africa back at 83%. Today, we're getting closer to -- in the 90% of levels, but already in June in the energy storage up to 100%. How does this all affect us? The first half impact of all of this we've quantified to you there on the right-hand side. I'm not going to go through the detailed elements each of them now. Sjoerd will show you the welfare cost in the financial section that we've paid, but it had a ZAR 250 million impact on the business that we believe is very well contained. It came from lots of sacrifices and a huge focus on cost control into the business. If we go then straight into the response strategy, I think what's very important on Slide #10, and we've shared this with you before, is that we took the approach. Our approach was to take it very seriously from day 1. From our lockdown period, we said this is not going to be a short-term effect of our business. This is a permanent structural redesign in how we need to operate. That is going to be for us at least for 18 months. And therefore, it requires a well-structured response strategy. Our response strategy is built on 6 pillars that I will show in the next slide, but we also want to install from a leadership point of view that we have to take it on positively, aggressively and with a forward-thinking attitude. But with huge amounts of increased governments and leadership in the year, I want to thank our Board. We properly had a Board meeting every week from the onset of the crisis that been -- gradually been able to phase down and the access to the Board, the counsel from the Board, the support and action from our Chairman and everybody as the Chairs of all of our committees helped us in formulating and executing the strategy, but also to help us to support to be able to pay the welfare payments to the employees. That is not a generic-design response strategy. We had to adjust it for each business vertical and for each region that we operate. In the next slide, it shows the 6 pillars that we builded around. Obviously, it was on the foundation that we used the principles in our approach. On that foundation, we built 6 pillars as a response strategy. And it was all aimed at our medium- and long-term sustainability, but also to execute on our 2022 vision where we wanted to hard-code and institutionalize the U-shaped recovery other than the L-shaped outlook that we have in South Africa, for instance, in vehicle sales that was important for us to frame that. Biggest focus, and again, a thank you for especially the HR personnel in our businesses and all the health and safety personnel that bear the brunt of it but our first focus was obviously health and safety of our employees. Here, I would like to maybe share the first learning. I think our communication with our employees were very good. The agreement on taking the 50% salary cut, our commitment that the entry-level employees, we're going to try and get as close as possible to 90% to 100% of their earnings. That's where the ZAR 3,500 welfare support payment came from because if you supplement that with the TERS payments that we could apply for, we could almost deliver at 90% of the earnings to them during that period. Then the focus on the health and safety, what we could have done better, it would have been nice if the lockdown was not so immediate. And the measures that we took in place for return to work could have been implemented already at lockdown, for instance, that we could send everybody home with the necessary safety equipment, with the masks, with all the sanitizer plus a full, let's say, health and safety brochure. And what you got to be aware of, how do you keep yourself safe, what is the home environment, what sort of symptoms you've got to be aware of, that would have been nice to have 3 or 4 days in the beginning to be able to frame that. So it's one part of our communication that we've learned, and we'll have that ready for the future. I'm not going to say much about the solvency and liquidity, that will be left to Sjoerd. Government interaction was a tremendous focus in the beginning to make sure because our initial classification was a Level 3 participant. That would have unfortunately wiped out for us the participation in May and June. And because we got to a Level 4 participation, we could pull that in already into May and June, and we showed you what percentage is utilization we put there. Exit plan was very, very important. Here, I'm going to share another learning. Exit pan has actually showed us that the safest place for our employees to be is actually to be at work. There, we can provide them financial security, emotional security, medical support plus all the preventive maintenance requirements from sanitizer, partnering with taxes in supporting them, putting up screens and giving them masks. And that plan, we think we executed very well. There was a cost to it, Sjoerd will speak to the cost. That cost at the moment is an installed cost into the business, although we've already expensed ZAR 7 million of it. We do believe there's some more coming in the second half. That's now the new norm on how we operate. We had a big focus, obviously, on our recovery plan. I will speak later to that. And that's where we believe that we'll be able to deliver to the market a U-shaped recovery. But on top of the U-shaped recovery, we're fortunate with the investments that our customers have already made and the focus of production of internal combustion engines in South Africa, especially the concentration in light commercial vehicle outlook for the future that on top of that, particularly in the automotive components business, we could look forward to significant growth. That growth today will be a little bit lower than pre-COVID. Initially, we said -- we thought that there's growth between 45% -- 40% and 45% installed in our business coming 2022, 2023. That properly reduced now to maybe 30% to 35%, but it's still fortunate that we can say that we're structurally locked into a business that's got infrastructure and investment design in it to be able to deliver on growth. And then I've already spoken to the governance and leadership roles that we wanted to play in the business to be able to lead from the front. I'm not going to go too much into Slide #12. I think this is there for your own consumption bar to say, we took a very hard decision upfront to cut our salary and wage expense down to 50% of ZAR 160 million, but do predict the week and the most vulnerable, and that was the lower earnings to get them to the 90% participation level, and we thank the Board for the allocation of ZAR 3,500 support per month for employees that was affected by all of these measures that we've taken. Just on the cases, I don't think we can talk about COVID without looking at our active cases. And we mentioned that to you 287 employees affected by COVID infections. Fortunately, the tragic loss that we had has been limited to only 3 employees within the South African environment and one in our mall facility overseas. The only challenge that we have to date, we've been able -- that most of our employees have been able to return to work, except those with the co-morbidities or out of those, we are trying our utmost to accommodate them to be able to work from home. But unfortunately, in a manufacturing environment, there's 180 of them that's unable to work from home. And now with Level 3 lockdown, government will terminate the TERS support as from the 15th of August last Friday, and we are left with a challenge on how those individuals affected, especially the 180 million (sic) [ 180 ] are going to be accommodated, and we will put our best minds together and see what we can do to accommodate them going forward now in Level 2. I would like here to hand over then from Slides 14 to Sjoerd and take back off these 2 slides.

Well, thanks, Theo. Just to put the government support in the various region into perspective, because as Theo mentioned, it's been quite different in all the areas we operate. So South Africa, we've covered to the maximum, it was 38% of pay, up to a maximum of ZAR 17,000 per person per month. So the total that an employee would earn in -- earns in excess of ZAR 17,000 would be ZAR 6,900. And obviously, that scales down. And it's in this area that we obviously support the employees for 1 month with ZAR 3,500. In Turkey, employees who were not required for -- to come to work received a 50% support from government. Romania, being in the European Union, was actually quite good, employees earned 75% support from government that were temporarily employed. And as such -- and I'll discuss that later. Our Rombat plant actually closed down for a period of about 2 months during this period. The U.K. sit at 80% of maximum. In Germany, the support has been very, very good, 100% of employee costs being covered. But unfortunately, Moll, our 25% investee company, was already dealing with the fallout, not the full market fallout, but also being a predominantly OEM-focused business was very hard hit by OEMs closing down from mid-March and it was clear that the business would require substantial cash and investment from shareholders to keep going. It was quite a bit of uncertainty around the tenure and how long it would take for that business to recover and transform into a more aftermarket business -- aftermarket-focused business and lithium-ion trading business. And as other shareholders were not able to support the business, Moll did enter pre-preliminary liquidation at the end of March. And then formal liquidation from the beginning of July this year. So we have written down our remaining investment in Moll of ZAR 108 million during this period. In Kenya, we were allowed to operate fully, but obviously under quite strict health and safety measures, slightly reduced demand and capacity, but actually trading was fairly robust during this period. And then, yes, welfare payments to employees, taking our balanced and sustainable approach as our theme was for last year's integrated report, we did support our most vulnerable employees to the extent of ZAR 61 million. Obviously, dealing -- coming into -- so I'm just trying to change the slide here. Okay. Let's go back. Good. One of the key things coming into the COVID crisis is obviously solvency, more importantly, liquidity. The potential impact on the business from ongoing and unavoidable costs, salaries, wages, et cetera, so our business is designed to prove robust. Luckily for us, we do own majority of our properties, so we didn't have any major rental outstanding cost, et cetera. From the beginning, we took it very seriously, we've modeled kind of worst-case scenario and a 3-month complete standstill, specifically in South Africa and planned accordingly. We planned -- we deferred all our major capital projects. We delayed project expenses, and we also had to defer dividend payments. Where we are today is the Board have obviously taken into account our projections and financial modeling on the recovery plan and outlook for the rest of the year, which is -- which we will talk to in detail at the end of the -- towards the back end of this presentation. And at the moment, we certainly are solvent and liquid. We do have adequate headroom, and we did meet our covenants at June. But the distribution of the dividend at this point in time will reach -- will result in a breach of an incurrent covenant of 2x net debt to EBITDA. And as we're in the phase of also raising funding for the future projects as well as the return, which is directly linked to the recovery in automotive components, et cetera. I think the Board have taken a decision that the breach of another incurrence covenant or potential breach of an incurrence government does put our continued access to liquidity and the recovery of Metair at risk, and as such and have opted to defer the dividend once more. The Board will continue to monitor the solvency and liquidity. More importantly, the liquidity and governance related to our funding and at the right time where the Board is comfortable that we can actually distribute the dividend and the dividend will be paid. Theo, back to you.

Thanks, Sjoerd. Yes. I mean I'm not going to spend too much on the slides -- the next slides, but it was important. And here, a big thank you for the access through the industry bodies that we managed to get a classification of the automotive industry, especially manufacturing and the vehicle manufacturers at the Level 4 participants. But also a big shutdown to the FNB team with the battery center franchise that managed to get classified as an essential service and that was to support all the health, safety, policing and other requirements by government organizations to be able to keep their fleets and especially distribution fleets. Everybody switched to digital ordering and home deliveries for all of their goods and there was very, very good aftermarket demand that we serviced through all of our battery centers. So Level 4 participant classification is fantastic. For Level 5 as essential service, but Level 4 as an industry, and that's something that we're obviously going to keep on working and keeping at that level if there is a setback in the future, and we have a second wave of the pandemic virus infections that we need to deal with. If I just quickly glance over Slide #17, the day we closed is the day that decided how we're going to open. And here, I want to thank everybody in the business because we wanted to migrate to the highest standard. We set ourselves the target that we want to be the example. We joined the international CEO forums, where we had open sharing of health and safety measures and return-to-work plans. And I do believe that Metair took a very responsible approach in this. We even had external orders done because, as you know, there's a host of new legislations and legal requirements that we had to adhere to. We didn't want to put any of our businesses at risk and be forced into a government shutdown, and we designed extensive return-to-work plans with all the necessary health, safe and social distancing, health and safety measures, PPE requirements. We went for early procurement out to all the PPE requirements. And I think it's been part of our structural design into the future. Just to give you one practical example, a big lesson for instance that we've learned, our energy vertical because of the particles in air that we need to manage in battery manufacturing constantly sucks the air out of our manufacturing facilities, replaces that with fresh outside air and put all of the recycled air through filtration systems. While, for instance, in the automotive components business, we are dealing with environmental issues that we need to need temperature control in the production facilities, especially, for instance, in our lighting business. And there, typically, we would have had recirculated heated air to be able to do the thermal control of our operating environment. Our design for the future will be to use radiant heat. So even from a practical point of view, how we design our factories, how they operate, how do we circulate air has all affected our businesses and the outlook because we want to make sure that restructuring design, our work -- return-to-work plans in such a way that we can operate even under most difficult circumstances in the future. Governance and leadership, I've already spoken to, I think it was an essential that we show leadership from the top that we designed recovery plan that we get in full total employee buying and support for our recovery plan and execute it, and that's why it was communicated to all employees. And I want to thank the Board for their access. We probably had more interaction in these 3 months than we had in 3 years before. But I think it was very necessary. And at any time of the day, weekends, night times, they made themselves available for us to be able to get approval for all of these measures that we needed to implement, especially where we needed to make special presentations to government and get the right input from the leadership group in the business. So thank you to everybody for your increased governance and leadership that you gave us during this period. I will hand back to Sjoerd on the operational status because I think this leads quite into understanding the result that he will then now give to you.

Thank you, Theo. So let's put all of COVID and the impact into better perspective. So operationally, South Africa, we were in lockdown Level 5, as you know, from 27th of March to 30th April. So we had no production in our automotive component business as well as FNB. Then in lockdown Level 4, which was for the duration of May, theoretically we could go up to 50%. As Theo said, realistically, I mean that's not possible. We were largely dependent on OEM and our customer demand and also ramp up and increased safety measures, et cetera. So that needed some time for production to say those -- Level 4 certainly also very much linked to the market demand. Then we entered lockdown Level 3, and we just come through lockdown Level 3, where we were directly able to operate in South Africa up to 100%. But again, a space that even -- although we could operate to 100%, it's clearly linked to market demand, and we'll go through the market demand and how we see the recovery at the end of this presentation in quite a bit of detail. Then in Turkey, Metair was classified an essential service, didn't have any long-duration lockdowns, had a few mini -- 9 mini lockdowns. The low operation which had also to adjust to market demand as people didn't travel as much. OEMs shut their facilities in mid-March only to open in June when they became operational, so we were pretty much at around 50% for the duration of that period in terms of capacity utilization. In Romania, Romania entered the state of emergency beginning of April to the 18th of May, OEMs like the European counterpart stopped -- other European counterparts also stopped producing. Rombat took the decision to close the facility. It wasn't a lockdown, but was able to service the aftermarket and OES channel out of stock, but certainly had much reduced demand. The U.K. continued to operate and actually had great demand in excess of what we typically experience. So that was a good trading period for dynamic in the U.K. Germany, I've covered OEM shutdown mid-March, only opened in June and obviously, Moll went into liquidation as a consequence. And Kenya, we've discussed already. Then looking at the automotive -- I was waiting for this slide. Looking at the automate components, you'll see quite clearly in the graph that I've provided as we mentioned at the results presentation earlier in the year. We did have a slow start to the year as some OEMs only opened later in the year. Then we had some legal strike action at the end of Feb, beginning of March at a major OEM. And then typically, what we would expect is a period of catch back where we can make back the lost production, even the slow start to the year with additional shifts and extra overtime, et cetera. But obviously, then entering a lockdown, we were unable to catch back any of the lost production, and we're currently on the trajectory of recovering [indiscernible]. Lost production will definitely will not be recovered, so there wouldn't be a prolonged catch back. It's clearly now on a forward-looking basis, matching the market demand. And basically, South Africa, we believe, is going to remain quite slow, but certainly, the recovery in our export markets look a lot more positive and that will be the major driver for the recovery in components. Looking at the energy storage side -- sorry, I'm -- here we go. As I mentioned, FNB was closed. OEM volumes remain under pressure. And as you can see, during this period, OEM volumes were down 46% for FNB. Post-lockdown, aftermarket demand has been really strong. And therefore, we've only been down about 12% compared to the prior year. Export has been very much limited by movement -- ability to move goods, so export was down 30% in industrial. We do believe we'll have a sustained downturn in demand, and we can already see the impact of the general economic activity on the industrial demand. Mutlu, biggest impact on Mutlu was the export market with a 61% decline compared to last year, really impacted by the movement of goods or inability to move goods into export markets. Our local aftermarket has been relatively good, only down 20%. And similarly, OEM, down 22%. At the moment, OEM demand in Turkey is back to around 90% of what we would expect. And currently, aftermarket demand is back to 2019 levels. So it looks like it's a full recovery. And looking forward, it's looking fairly strong as well. Rombat was actually the least impacted by the 3 -- of the 3 businesses, only down 16% in volume. OEM, down 21%; local aftermarket down 18%; and export market still able to move goods and 15% down. Post demand -- post-May demand, specifically for Rombat, both on OEM, OES and export markets have been really good, and Rombat is currently operating at 100% capacity. We are actually trying to find some more capacity. Then I mean looking -- bearing that in mind, I mean, let's look to the financial -- historical financial results. I'm not going to dwell on the historical and briefly cover it and spend, I think, more time or leave some time at least to cover the recovery plan and how we see the immediate and the short and the medium-term future. So firstly, just to quantify some of the impact of COVID-19 on the results, this is obviously the individual items that have been -- that can be quantified but certainly does not reflect the loss of profits that we experienced during this period been really strong, and therefore, we've only been down about 12% compared to the prior year. Export has been very much limited by movement -- ability to move goods, so export was down 30% in industrial. We do believe we'll have a sustained downturn in demand, and we can already see the impact of the general economic activity on the industrial demand. Mutlu, biggest impact on Mutlu was the export market with a 61% decline compared to last year, really impacted by the movement of goods -- or inability to move this into export markets. Our local aftermarket has been relatively good, only down 20% and similarly, OEM, down 22%. At the moment, OEM demand in Turkey is back to around 90% of what we would expect. And currently, aftermarket demand is back to 2019 levels. So it looks like it's a full recovery, and looking forward it’s looking fairly strong as well. Rombat was actually the least impacted by of the 3 businesses, only down 16% in volume. OEM down 21%, local -- aftermarket down 18% and export market, still able to move goods at 15% down. The both may demand, specifically for Rombat, both on OEM, OEs and export markets have been really good, and Rombat is currently operating at 100% capacity. We're actually trying to find some more capacity. Then I mean looking -- bearing that amount, I mean, let's look to the financial -- historical financial results. I'm not going to dwell on the historical, and I'll briefly cover it and spend, I think more time -- will leave some time at least to cover the recovery plan and how we see the immediate and the short- and the medium-term future. So firstly, just to quantify some of the impact of COVID-19 on the results. This is obviously the individual items that have been -- can be quantified, but certainly does not reflect the loss of profits that we experienced during this period. So firstly, overall, revenue was down ZAR 1.5 billion. Then we mentioned the welfare and salaries payments of ZAR 68 million made during the period. Then we did see a sharp uptick in trade debt to impairments of ZAR 45 million, but the majority of that ZAR 32 million relates to a more trade receivable. Then just to overlay that, we actually have seen a really good recovery in debtors throughout the group and actually surprisingly, surprisingly good. So we haven't actually seen a real concern around any of the recoverability of our debtors. And then we also looked at our impairment testing for the whole group, all our material cash-generating units. And apart from Moll, we still based on our recovery plans, we have sufficient headroom in all of our investments against risk-adjusted rates, et cetera. So we don't have any further impairments. And I think business interruption has got a hot topic at the moment. We do have cover under an extended damages section, which is pandemic-specific. We do qualify for it. We're in the process of submitting and preparing all of our detailed claims, calculations, et cetera. Unfortunately, the claim is limited to ZAR 50 million because it's quite an unusual event. And although the actual loss of profits will be substantially higher than the ZAR 50 million, we are confident that we will recover the ZAR 50 million, but they're not accounted for it in this set of results from an IFRS point of view. We can only account at once it's virtually certain that we will that we will collect the insurance payment. And then, yes, as we mentioned, we impaired the Moll investment to the extent of ZAR 108 million. So that effectively takes care of the total investment. At a vertical level, given that range resections, loss of profit, the cost of COVID, et cetera. How does that translate in terms of operating performance? In total, revenue down 27%. Energy storage, only down 20%, certainly helped by the fact that they -- that it's more diversified into aftermarket as well as export channels and not purely OEM-focused. And of course, that Mutlu and Rombat could operate throughout the -- to an extent throughout the lockdown period. In South Africa, OEMs were down 40% in terms of turnover. So on operating profit level, energy storage managed to be profitable, ZAR 74 million, although it's down 74% to last year at a margin of 3%. Automotive components, that recorded a loss in at the operating level, and that gives us a group position of a loss of ZAR 18 million, which is -- which I think is a really good outcome given what we've been through. And then looking at the half year 2020 results. From the end of quarter 1, we really felt the impact of COVID. And then from quarter 2, it was really all about cost management, balance sheet management, et cetera. So given the extensive trading restrictions on the business, COVID costs, loss of profits, we believe it's a really good result, almost breakeven on EBIT. More importantly, we managed to be positive -- achieved positive EBITDA of ZAR 138 million. And at a vertical level, energy storage achieved ZAR 178 million positive EBITDA. Automotive components, just sneaked into positive territory at ZAR 21 million. But certainly, cash management, working capital management, cost management was first price. So we're really happy with free cash flow positive at ZAR 70 million. And then, of course, after paying interest, it leaves us at a headline earnings per share loss of ZAR 0.56 per share. On a little bit of detail on the income statement, I just want to highlight the interest charge of ZAR 91 million, which is down from prior year interest rates have come down across all of the territories and most significantly in Turkey. Associated loss of ZAR 116 million, does include the Moll write-down of ZAR 108 million. And then other income increased mainly due to mark-to-market revaluation on forward exchange derivatives. But basically, our net ForEx position for the first 6 months is near breakeven. Then on -- from returns perspective, the last LTM, last 12 months, the return on invested capital has declined to 6.4%, mainly driven by the reduction in earnings and the slightly higher invested capital base at June 2020. And then from a balance sheet perspective, we certainly prioritize our balance sheet integrity as far as possible, limiting cash burn and outflows, debt levels, protect our liquidity, et cetera. So initially, we did access some additional liquidity, but turned out not to be required. It was just a precaution, I think very similar to other businesses, other companies. Now we have a significantly more visibility on the future performance, which is excellent. And then the asset base overall increased slightly due to some limited capital investment, slightly higher inventory levels, which I'll cover in the working capital section. And it is worth a mention just that the recoverability or the receivables collection rate was really excellent throughout this period. From a net debt perspective, we managed to respect the increase to only ZAR 60 million. So total borrowings increased ZAR 400 million. It was just a short-term increase in liquidity. And due to our good cash management at 30 June, we actually don't have any overdue creditors within the group. So we've looked after our suppliers as well, which is excellent. On the working capital itself, it was clearly a major focus areas for us. We saw 2 distinct trends: firstly, as the activity levels and energy storage started to come down, we did see a nice decrease in working capital and our release of cash and also that in the free cash of energy storage. But in automotive component, there is quite a significant amount of imported content still. It's got a lead time of 6 to 8 weeks. And unfortunately, the ships don't turnaround. So there's been a buildup of inventory in automotive components. At 30 June, obviously, stock coming in, combined with the lack of production at capacity. And we do expect that, that will take about 2 to 3 months to normalize. So September, October, we should be back to normal levels. From the capital and debt structure -- sorry I'm just waiting for the slide to turn. Right. So on the capital and debt structure, we had a very healthy balance sheet coming into COVID, which is obviously very good. And although we managed the debt well with a slight increase into ZAR 60 million. Obviously, the downturn in the last 12-month EBITDA has resulted in our net debt-to-EBITDA ratio ticking up to about 1.9x. So we've met the covenants at June to stay below the 2x and the 2x is an occurrence covenant upper limit on total indebtedness is 2.5x. And we expect to manage the covenants to stay below 2x based on what we expect in terms of our second half recovery and into next year. But as I mentioned, the dividend payment at this point in time would push us over the incurrence covenant. And therefore, we have decided to defer the dividend until so time as we do meet the liquidity or reasonably certain on liquidity in terms of the companies act. During the period, we have also refinanced or extended the maturity on ZAR 750 million of revolving credit facility. And I'd like to thank specifically our relationship banks, Standard Bank, Absa, Investec for your support in that, and also for your continued support on future projects, which is very encouraging. And then briefly looking at the -- if the slide will go, automotive components vertical performance. As we mentioned, revenue down almost 40%; EBITDA, ZAR 21 million; free cash flow, outflow of $344 million, that's very much driven by the stock increase in stock levels, which will unwind in the next 2 to 3 months. But we do anticipate a major improvement in the second half of 2020 as OEMs move close to the plan to build the production rates, and a lot of that will be driven by export demand, which we will discuss. From a return on investment capital, I don't think we've seen relatively low returns like this from components in a long time. That's producing a very high return business, but down to 11%, so obviously driven by downturn in earnings, but also slightly higher working capital. And then we do expect a much better improvement in terms of free cash generation in the second half of the year. Then briefly, just touching on energy storage vertical revenue down 20%, EBITDA down by 50% to ZAR 178 million. Free cash flow was actually excellent during this period despite relatively low earnings of ZAR 340 of cash -- free cash generated by energy storage. Regular function of good working capital management. And then looking at the segmental performance. Automotive business -- this is the battery. Automotive battery's profitability declined by ZAR 164 million operating profit to ZAR 92 million. But as you can see that the industrial demand has dropped off quite significantly. And I -- and we believe that will remain quite weak as on the other side, we've obviously seen a very good return to productivity activity levels and overall capacity utilization on the automotive side of our business. And then I'll finish just with the individual energy storage businesses in country or for ZAR-based operating profit, so Mutlu dropped by -- in local currency, it's 75%; Rombat by half and FNB by 87%. And you can see the relative contributions to EBIT, Mutlu ZAR 37 million, Rombat ZAR 24 million and FNB at ZAR 13 million. And I think now more importantly, I'll hand back to Theo that we cover our recovery plan and also the short-, medium- and longer-term outlook for Metair. Theo?

Thanks, Sjoerd. I'm not going to grow extensively through all the slides. I think this is more intended for one-on-one interaction. But as I mentioned, we do believe that we needed to bring comprehensive commentary to the market. That includes our recovery view and our recovery plan. We're fortunate that, as you know, we were in the midst of doing a strategic review. We also decided in the strategic review to engage a company called [indiscernible] in Germany. That's sort of a market specialist and providing OEMs and component suppliers worldwide with commercial due diligence and verification, especially on trends on what type of vehicles are going to be manufactured on technology trends, but also the vehicle volume and manufacturing outlooks. And to frame for their customers, the potential between a V-, U- and L shaped recovery. What we did do in this period hasn't happened during COVID, we extended their brief so to also do a very reputation for us in a forward-looking view that we build our recovery plan on. So we'll just touch on some of the slides. But I do expect during the one-on-ones that you have a bit more questioning on this, and we're happy to take it. But it's just to provide you the base that we are using to show you our recovery plan. So was important to for us, as we said, to be a chameleon, total focus on the now, but also a total focus on the future. We do believe that in both of our verticals, we've got U-shaped potential recoveries, but they come from different angles. Automotive components, we are fortunate that even in the period that we now that some of our customers are bringing new products to the market. That gives structural support to the recovery. Some of our customers are also mostly in launching new facelifts. And unfortunately or fortunately, for us, a facelift is something that's cast in stone and they're already build up the stock. So they've got a huge focus on manufacturing those products. How do they deal with that on a market customer-facing side, if it goes through dealerships, do they go to other export markets that our discounts into the market is a different side of the equation. But they've got fixed date for changes, and therefore, we see a full utilization of the current components that we have in that business to be utilized. And that gives us the confidence that we do believe that 2020 was the blip; and that for 2021, we could be an equal level where we were in 2019. It's not necessarily true for all of the customers, but is particularly true for Toyota, who is our major tenant in regards to our turnover in the automotive components side. Energy vertical is the strong aftermarket demand. We're also focusing a little bit more on our brand positioning, and we are able to launch what we call fighter brands in all of the markets that we are in. As you know, we always take a very, very strong position on our commodities, especially lead. So we are a big carrier of lead on our balance sheet. Lead is 60% of our input cost into a battery and has given us quite a strong competitive position, given the fact in Turkey that our positions slows down during this period. That in the weakening currency environments that we particularly have seen in Turkey and the weakening currency environment that we see in South Africa, that we do believe that we can get our growth from increased focus aftermarket share. So it's 2 very different approaches to the recovery. But what is overlaid with us the technical requirements, IT calling is quite aggressive in their view that one of the trends coming out of COVID-19 will be a switch to a more affordable entry-level internal combustion engine vehicles combined with start-stop systems. So that seems to be -- going to be a manufacturing hyper focus area for internal combustion engines as our customers want to produce the electrification vehicles, well, the fully electric vehicles closer to how in the European environments, and that has a great opportunity in South Africa for servicing that particular export market. So although the recoveries are both U-shaped, they come from 2 very different bases. On the slides that I'm going to show you, 39, I think, is just there for your own study and consumption that we will discuss with you in detail. But what's important is that us as a business, together with our input from our management the fact that we've had top-to-top meetings with all of our major customers at the highest level, sharing the next 2 year volume forecast and manufacturing plans for us. They have become a bit more sensitive. I must just sensitize you on that. Previously, we would have been able to give you model names, dates, volumes and when they launch because in this highly competitive environment, they've become a little bit more concerned about sharing across platforms, their recovery plans when they launch the vehicles, what they're going to look like. And what the volumes are going to be. So unfortunately, we had to turn that disclosure down in line with the confidentiality agreements that we signed with them. Currently combined with us internally in the business, supported by our customer view and third-party verification by [indiscernible]. We're unfortunately not going to be in the V-shaped recovery like in China. But we definitely locked into U-shaped recovery from a manufacturing and export vehicle volume point of view and aftermarket demand point of view in our business, while vehicle sales in South Africa could probably be in L shape. And I think that's a big distinction to be making that there is different shapes for the different sectors of our industry, even though we're in the same industry, manufacturing outlet because of the export markets is very different. And that's where we share with you in the following slides, how we see this recovery from day 1. We actually gave the subsidiaries a target that we want to be in 100% back in 2021 and about at 120% level in 2022, post-COVID-19 compared to pre-COVID. That's supported in slide number 41 on [indiscernible] view, and that's for your own study and how they see the different markets, which ones were the most effective where were -- Europe is going to be in total vehicle sales, where North America is going to be. China only 3% down. But the combination of our recovery plan is based on where we export to. So there is a lot of granular and detailed information behind this in where we're going to export to. What markets we're going to be in? What models we're going to be in? And how does it correlate to an external source view on the U shape recovery. But the consensus conclusion between all of us, customers, ourselves and external commercial due diligence advisers is definitely that we look like we design to be in a U shape recovery. What does it a U shape then mean from a Metair perspective? So we've improved on less significantly, our initial view, if you look at the energy vertical, whilst that even 2021 could be at the 80% to 90% level. Our current view of what we're experiencing and the capacity issues that we have a certain extent that we need to import batteries or buy out some of the product to fill the gap that was created by us not being able to produce during the lockdown and covert periods that we've got the potential in 2021 to be back at the pre-COVID 2019 levels, with a view that we could be at 95% to 100%. And then with our focus in the return of our traditional customers, it was also important, our customers are not so concerned anymore about having 3 or 4 or 5 suppliers. As you can imagine, lockdown makes it very difficult for them to have factory visits to do process and product verification audits. And therefore, we do believe that we're going into a period where localization and concentrated supply, it's not going to be the big challenge that it's been in the past. Then the exciting one that requires the investment is where we see the automotive components business in South Africa going, particularly with the business that we've secured were for. And I think that's also the protest moment that we have out of that we're able to say in the execution of those new businesses, contracts were ford that cover all of our businesses. Although in the market commentary, we sometimes focus on what will happen in Lumotech in lighting manufacturer, what will happen in Hesto, wire harness manufacturer, what will happen in wire drawing and our WA manufacturers we focused on local content, that is actually business for all of our businesses. We've managed to cover all of them. Some of them don't need necessarily the capital investments that's required, for instance, like a ester but it gives us the ability to say that in the current project outlooks that we have, and especially in the cooperation between Ford and Volkswagen in regards to light commercial visual design, and the cooperation agreement that they have signed with them, where Ford will be the focus in the design of their commercial vehicles, light commercial vehicles and the manufacture of their light commercial vehicles and the manufacture of the light commercial vehicles in South Africa. That in 2022, 2023, we can be 60% to 80% growth, that's already invested and being executed by our customers. Where finally we land, will obviously depend on the volume at that particular time. The only sort of effect that COVID had on this IS a slight delay. We unfortunately can't share with you the start dates or the SOP dates of those -- launch of the new vehicles. Because in the current environment, our customers are quite sensitive because they see that as a strategic advantage on when they will launch the vehicle, which one will be first, what markets will they access first. And the only sort of delay is there is a delay in those projects equivalent to the lockdown periods that was brought about by the pandemic. So properly focusing to the later end of 2022 for those projects to come into action. And definitely, to be at the full capacity levels in the 2023 financial year. And I think that's the intro for Sjoerd just to talk about the new investments that we need to make for Ford contracts and where do we see them coming from?

Thanks, Theo. I think in the interest of time, honestly, we're running a bit late. I'm not going to go through a huge amount of detail, but this is one of the key projects that we have secured, which obviously, in our own recovery and future growth plays quite a significant role. So the contracts that we have secured from Ford will deliver about ZAR 25 billion to ZAR 28 billion in turnover over a model life. Model life is typically 7 years. And it shouldn't be the first model if we keep the business, it's obviously much more significant in terms of a return profile beyond the first 7 years. The total group capital investment in PPE is about ZAR 900 million. About ZAR 230 million is the construction of a new factory in Hesto. There's also initial working capital investment of about ZAR 350 million for the group. This is across about 3 or 4 companies, but it's -- certainly the biggest will be at Hesto. Capital investment, as Theo mentioned, slightly delayed, but it is over a 24-month period, quite linear. The debt will be funded the underlying operating companies. Project volumes is expected to be significantly higher than current production and South Africa has got the potential to double Ford's production in SA. From a Metair perspective, certainly, we've secured the business, meeting all of our investment -- returns investment criteria from a ROIC, return on assets, ROA, et cetera, perspective. And the new Ranger, certainly earmarked to be a very exciting model for Ford. And one of the top models, and Ford have also cooperated with VW to manufacture the Amarok platform for them in South Africa. So this will be a combined 2-platform project located in Soweto -- in Pretoria. Majority of this, obviously, from a growth -- volume growth perspective is for export markets. And only a limited number of these vehicles will be sold in South Africa, which are already in export. So to give it a little bit more clearer guidance on the outlook for 2020. We certainly expect South African market from a manufacturing or automotive demand perspective to remain quite weak. But we do, as we've mentioned, see quite a strong recovery in demand from exports, more than 60% of the vehicles produced in South Africa are for export destinations. So it's obviously very significant to see the recovery in Europe, in China, in the U.K., et cetera. At the moment, we're seeing really strong aftermarket battery demand almost -- normally, we see the start of demand during the peak European winter season, especially in Rombat and Turkey, certainly a month or 2 before we normally see. So it's really good demand. And if it sustained through to the typical winter cycle, the second half of the year could be very strong from an automotive battery point of view. So we expect the second half of the year, total revenue growth for the group to be about 40%, 50% compared to the first half and therefore, attaining probably 90% or more than 90% of the prior year H2 comparative, so very close to last year. Operating profit, we expect in both segments or both verticals to return to profitability and consolidated operating margin between 5.5% and 7%, assuming stable ForEx and obviously no further manufacturing disruptions and our continued ability to manufacture in that there are no further pandemic-related disruptions. We do expect positive free cash flow. But with some additional debt as well as capital expenditure as we protect our new product, our new launch programs, and then we still believe that we will -- will comply with our lenders' covenants within this -- the next 6 months, obviously, provided that we defer the dividend for the time being. How does that -- what does that translate you for the H2 verticals? Automotive components, we expect an improvement of about 60,000 to 70,000 units in H2 compared to H1 2020. It will still be down 75,000 to 80,000 units compared to the second half of 2019. And effectively, that translates to volumes between 400,000 and 440,000 units for the full year, about 30% down for the full year compared to 2019. Any recovery in automotive components will certainly be driven by strong export demand, new face this new project launched. We therefore expect full year EBIT margin between 1% and 3%, which puts our second half margins about 4% to 6%. And I have mentioned, no further expected manufacturing disruptions. And we do expect working capital to unwind in the second half with improved free cash flow generation, but still capital expenditure of around ZAR 230 million for new projects. On the energy storage side, a recovery primarily based on aftermarket demand. Local and as well as export and return to OEM production in Turkey and Romania. The aftermarket demand, as I mentioned, has been really strong in the short term with capacities fully utilized for the next few months. And then we do have the second half, which is normally associated with a very seasonal demand, high season demand, and we expect these assumptions -- obviously, expect that trend to continue. One of the conditions, which we've spoken about, is obviously our ability to serve and reach our export customers. We -- up to date in-country lockdown regulations has, to an extent, limited our ability to move goods. So we expect total at amount of batteries to improve about 1.3 million to 1.5 million units in the second half compared to the first half, which puts the full year units at around 7 million to 7.2 million batteries. And then full year '20 revenue projected to be about 10% to 15% lower than 2019, which is a great outcome and then full year margins, EBIT margins of between 6% and 8%, which will put our second half margins between 8% and 10%. And based on our current visibility and our current outlook on the market, second half 2020 for the energy storage business does have the potential to be on par or even slightly better than 2019. And with that, I'll hand back to Theo just to conclude with the strategic review. Are you there?

Can you hear me?

Yes. So try again.

Yes. So thank you, Sjoerd. I mean, it's quite a lengthy presentation that we gave you. Thank you for your attendance. I have seen 20 people drop off, so we probably went 20 minutes too long. But it was a very important result to unpack, but also the future to share. And I'll quickly just spend 1 minute on our strategic review. It's obviously important for us to continue looking at how do we deliver value to shareholders. We had -- initially had a time line on the potential sale of the energy vertical. We've decided at yesterday's Board meeting of the Board that because the H2 recovery will be very important for potential suites in the business to see traction on the recovery plans that we produce and also give them credibility and value support. And therefore, we've decided to delay everything by 6 months. The Board will continue to review the market conditions and the value indications that we get. And with the right market conditions and the right value indications, our adjusted, sort of, indicative timing is that we will aim for H2 in 2021 to conclude the process. Should the market conditions be conducive to that. But it obviously needs to be supported by some traction on our recovery strategy. With that, we close off, we're really sorry that we've run over. That leaves limited time for questions. [Operator Instructions] But thank you very much for your kind attention, and we hope that you found our presentation useful, insightful and supportive of our positive view and outlook for the business going forward.

We've got 2 questions from Simon Fillmore with Independent securities. The first one is in terms of the energy storage business, what are you most excited about in the future? And are there any interesting trends in the energy storage space? The second one is, what is management's long-term return on invested capital target for the group?

Okay. I'll give Sjoerd the ROIC question to answer first, and then I'll circle back to the energy storage business.

I'll repeat myself. So the long-term target on ROIC is excess returns over the cost of capital, current cost of capital, most recent cost of capital weighted average cost of capital was around 13%. And then that target would be a 3 to 4 or up, end target being the return, that will be the upper end target on return on invested capital. So effectively, close to between 16% and 17%.

Thanks, Sjoerd. The excitement is the resilience that we've seen in the energy vertical business. For us. We're also quite excited that we think that we can make traction in our local aftermarket shares. We will have to look at brand positioning. As consumers are constrained, they also need economic solutions. It's not something that we've really explored in the future. So we do believe there is opportunity for us to launch economic ranges. We've also had quite a lot of interest from developed export markets for additional exports into those markets from peer distributors, where people were previously importing from, let's say, regions that currently had constraints China, Korea and [indiscernible], they're trying to get sourcing closer to home, especially into Europe and especially into the U.S., but that all depends on our export market. So a big portion of the excitement that we do have is that we can have traction in our aftermarket share within our own regions that we have significant market shares and the export market, but that will have to be dealt with in the access to the market. At the moment, we don't find any real serious [ tractual ] problems in delivering to those markets, but there is a preference for local supply. And it's how do we unlock economic proposition for them from an export perspective. So we do believe there's export opportunity. But it obviously maybe even needs for us to look at the design of our product and have a little bit more focus on private branding. And there's a lot of requests for prior training, and there's a lot of requests for economic ranges. But it's got to be matched with our capacity. And we will study that during the next 6 months as we go into the high season and see where our capacity utilization is. Because at the moment, we're very fortunate that the short-term forward look is almost look at full capacity utilization and even shortage that we have to fill in the model of some of the sales that we've lost during the COVID pandemic.

Thank you, Theo. We have further 2 questions from Tinashe Hove of Laurium Capital. The first one is, can you indicate how many bidders initially indicated interest in the energy business? And how many are still in the running? The second question is, how are you approaching the CEO recruitment process where it's not entirely clear whether the incoming CEO would be running the combined group or the remaining automotive business only after the energy business is sold?

Yes, still, very good questions. Let me start with the CEO. The CEO recruitment process as we announced to the market is done by a professional search company for us, Heidrick & Struggles. We've identified both internal and external candidates. And it's certainly the Board's view to have a group CEO because Metair might stay the way it is. So you can't plan for uncertain outcome. We can plan for what we have today. What needs to be managed today and what needs to be in the rest of the day. So certainly, the CEO will take total responsibility for both the automotive components and energy vertical as it stands with the full investments of Metair today. Let me just go back to the other one. Yes, just on the bidders, we haven't seen any bidders withdraw from the interest in the energy vertical. I think it's pretty much dependent on their own economic position. Those bidders that have strong balance sheets doesn't have to go to capital markets to do an acquisition. Obviously, have tremendous strong interest still, but there is bidders that are dealing with their own effects of COVID on the business. And that's why the Board has learned that the best approach to accommodate both sides of those better profiles is just to delay the process by 6 months. It gives us traction to execute on our recovery strategy, improve the strong second half projection that we have, both in the energy vertical and obviously, the automotive components business as well.

It appears we don't have any more questions. I'd just like to hand over to, Sjoerd, just to say a final word, please.

That doesn't help if I say thank you and then we might [indiscernible]. So just a final word. I think clearly, you mentioned at the start of the discussion that this is your final results presentation for Metair. It's been 29, of which I maybe have the privilege of maybe 10 or -- I suppose 10 or 12. I might be up to 12 or 13 now. And I just want to really thank Theo for your contribution to the group before and after my arrival. Your leadership has been exemplary to everybody within the group. Your passion for Metair has always been huge, tremendous. Sometimes -- most of the time, it comes with a great personal cost, but you always put Metair first. And under your leadership, we made a weather quite a few storms, 2008, 2009 financial crisis, but also under your leadership, Metair was transforming into a truly international business into new geographies when the South African outlook for manufacturing was maybe not looking that great, both the near future and alternative future for Metair into new geographies, acquired Rombat, Mutlu and invested in Kenya, Germany and the U.K., most recently invested in new technologies. And I think most -- probably one of the most significant events is obviously the major customer diversification projects that we have secured, which again puts the automotive component business on a completely different projector. You've touched everybody in the group. We're very proud to have had you as a leader, and we're all very happy that the Board has concluded a 2-year consultancy agreement with you and that you're not -- this is not fare well. You will be around, you'll still be a very major part of Metair and the future of Metair and Metair's recovery, and that is obviously something that we're very happy about. And yes, I just wanted to -- just thought it's very appropriate to acknowledge your contribution to the group in a pretty small way now because it is your last results presentation. And thank you. Thank you very much. We're very perfect to be have you as the CEO for the group for another few months.

Thank you, Sjoerd, and thank you to everybody. I always say business is a team sport. You definitely, one of the inside players in that sport with all of our subsidiary directors in the Board and has been a tremendous treasure for me to serve Metair. I have got your eye, the passion for the business. I'm very interested to see it successful in the future. And I want to thank all the stakeholders, participants today and Board members and our executive teams for all of your support, and especially the Metair management team. And Sjoerd, you've done a fantastic job. You've always showed us we can improve continuously. And thank you for what you're put in helping and supporting me and making us a very, very strong team. Thank you very much.

Thanks, Theo.

Thank you, everybody.