Rolled aluminium producer Hulamin’s earnings are stellar, boosted by higher prices and higher sales volumes
HULAMIN, a manufacturer of rolled aluminium products, yesterday released stellar results bolstered by robust demand for aluminium products.
Its results for the year ended December 31 showed that operating profit jumped 760 percent to R538 million from a loss of R81 million in the previous year.
Group sales volumes increased by 34 percent to 222 000 tons, revenue grew by 52 percent to R13 billion, free cash flow from operating activities improved by 166 percent to R239m, and basic earnings per share increased by 347 percent to reach R1.92 cents.
Normalised earnings before interest, taxes, depreciation, and amortisation (EBITDA), which excludes the metal price lag (MPL), increased by 254 percent.
Headline earnings improved to R560m from a R220m loss in the prior year. The group also said headline earnings per share was up by 187 percent to 182 cents from a 94 cents loss in 2020.
“The realisation of higher prices, ongoing cost controls, and metal price lag profits earned contributed measurably to performance. Cash remained tight throughout the year as a result of higher rand London Metal Exchange (LME) aluminium price absorption into working capital,” the group said.
The group did not declare a dividend. The company said its underlying business health had improved considerably.
“Increases in the LME price of aluminium will likely constrain the balance sheet and could constrain volumes should further increases occur. This risk is heightened by the energy crisis and aluminium supply constraints arising from the Ukraine conflict,” chief executive Richard Jacob said.
“Hulamin responded to the tough trading conditions of 2019 and 2020, returning to profitability in 2021. Contributors to this return to profitability include increased volumes, higher realised prices, and growth in local sales. The (LME) aluminium price contributed measurably, further boosted by utilisation of assessed losses.”
Jacob said local sales grew 65 percent, driven by the growth in beverage can consumption and the imposition of import duties on aluminium flat-rolled products into South Africa.
“Following the completion of its turnaround plans in 2020, Hulamin Extrusions performed well in 2021, generating profits for the year, which included the proceeds of the sale of the Olifantsfontein property.“
He said 2022 began with solid demand, firmer prices than in recent years, and a reasonable rand/dollar exchange rate.
“Should these conditions continue, we expect the healthier trading conditions to persist, albeit without the metal price lag benefits experienced in 2021,” he said.
“Demand for beverage can stock has firmed widely across the globe over the past two to three years. The increase in local beverage can stock demand is in line with global trends, driven by the environmental impact of single-use plastics, largely in the carbonated soft drink market, and the recognition of aluminium as a 100 percent recyclable material,” the group said.
This trend had begun to have a major impact on the local market, where a shortage of glass containers had supported the alcohol market in addition to the above factors, the company said.
dieketseng.maleke@inl.co.za
BUSINESS REPORT ONLINE