JOHANNESBURG - JSE-listed aluminium products supplier Hulamin, in the six months ended June, improved its profit performance and generated free cash flows despite the ongoing Covid-19 disruption.
Hulamin said it continued to implement its turnaround actions. Improvements in capacity utilisation, tightening its cost base, increasing sales and improving manufacturing performance had provided the basis for improved profitability.
Earnings before interest, taxes, depreciation and amortisation improved by 166 percent in the reporting period to R78.6 million, while basic earnings a share increased by 139 percent to 29 cents. Basic headline earnings per share leapt 121 percent to 15c.
Its revenue increased by 50 percent to R5.5 billion, with the group's rolled products sales increasing by 43 percent and Hulamin Extrusions sales up by 58 percent compared to the same period in 2020.
Speaking to Business Report, Hulamin chief executive Richard Jacob said the company had pulled through a difficult period during the past two years.
“I am pleased that the company has pulled through a very difficult period that started in 2019. Even before Covid, we had tough times with some problems. Covid-19 hit last year so it has been a really difficult couple of years, but it is nice to see the resilience in the business.
“We are improving and have a much better performance this year compared to last year.”
While the company has presented solid results, it has also informed its shareholders that dividends will not be paid out.
"With the value of our working capital, our inventory has gone up a lot, because of the rise in the price of aluminium. That has stretched out our balance sheet. Our borrowing is a lot higher than a year or two ago. With the unavailability of cash, we have decided to be conservative and keep the money in the business,“ said Jacobs.
Hulamin said that, along with Covid-19 challenges, a strengthening rand had also retarded the firm’s improvement momentum.
Despite these challenges, Hulamin said it continued to increase volumes. A firming LME aluminium price and increases in market prices had both supported the return to positive earnings.
Group sales increased by 44 percent to 102 000 tons. Turnover increased by 50 percent to R5.5bn.
Demand for aluminium products remained firm in most markets, despite the broad slowdown in economic activity in both South Africa and globally.
Demand for beverage can products was particularly strong in the local market but the demand for non-packaging products continued to be constrained due to Covid-19-related economic uncertainty.
Automotive demand had improved steadily since mid-2020 although this remained tentative, it said.
The company said it had lost more than 4 000 tons of sales during the unrest that gripped KwaZulu-Natal and parts of Gauteng in July.
“It will not be possible to catch up with the majority of those sales,” it said.
Just after the civil unrest, Hulamin was also affected by a cyber-attack on the Durban Container Port, which delayed the shipping of export sales by over 2 000 tons. The impact of the cyber-attack on Hulamin's cash flow amounted to about R200m.
“Although these sales will be caught up in August, cash flows were negatively impacted,” the company said.
Jacob said while the company had not reached its 2018 numbers, he was optimistic about the future.
“Things are getting back to normal, and I look forward to a better performance in the second half and into next year,” he said.
By 3.30pm Hulamin’s share price was 5.58 percent lower at R2.54 on the JSE.
BUSINESS REPORT ONLINE