Aluminium manufacturer Hulamin achieved a 19% increase in headline earnings to R64-million for the year ended December 31, 2012, from R54-million in 2011, during what CEO Richard Jacob described as an “up-and-down year".

“With rand aluminium prices remaining fairly stable, the metal price revaluation declined from a loss of R34-million in 2011 to a loss of R2-million in 2012, after recording a profit of R15-million for the first six months of 2012. The weakening of the rand towards the end of the year has contributed to the improved financial results,” he said.

Turnover for the year decreased to R6.54-billion in 2012 from R6.91-billion in 2011 on lower rolled products sales, which totalled 194 000 t compared with 208 000 t in the previous year.

The lower production was largely owing to a motor fault at the Camps Drift hot finishing mill in April, with the resulting stoppage causing a loss of some 25 000 t, or 11% of yearly sales and equating to an estimated operating loss of R154-million.

Operating profit increased by 44% to R245-million, which included the employer allocation of R164-million arising out of the successful conversion and outsourcing of the Hulamin Pension Fund, and offset by the R84-million impairment of mothballed and underperforming assets.

International market performance remained uncertain throughout 2012 as growth moderated in China and weaker manufacturing in Europe impacted on both international demand and margins. 

“Domestic demand for both rolled and extruded products remained under pressure as the competitiveness of South African manufacturing continued to be eroded by rising costs and competition from aggressively priced imports,” he told Engineering News Online.

The company expected continuing subdued market conditions in 2013, which would place pressure on margin and mix optimisation, with a gradual improvement in demand.

However, Jacob said he was optimistic that the recent agreement to supply packaging company Nampak’s Bevcan subsidiary with aluminium can body stock from 2013 to 2015 would be a significant development for the entire market and indicated an opportunity for local sales growth in excess of 50% by 2016.

“It is a substantial increase in our local sales and allows us to buy huge amounts of scrap aluminium, which is likely to result in reasonably large capital expenditure over the new few years,” he said.

The board did not declare a final dividend for the year.