Hulamin expects double-digit plunge in H1 earnings
Revising its initial April trading update for the first half of the 2015 financial year, aluminium manufacturer Hulamin on Tuesday said it now expected earnings to plunge by around 40% on the back of lower volumes, electricity supply curtailments, quality issues and a lagging metal price.
Hulamin was gearing up for a potential 39% to 44% decline in headline earnings per share (HEPS) from 41c a share for the six months to June 2014 to between 23c and 25c a share for the first half of 2015.
Earnings per share (EPS) were expected to be between 22c and 24c apiece for the six months under review, a 41% to 46% drop on the 41c a share recorded in the first half of the prior year.
A double-digit decline in normalised EPS to between 24c and 26c a share was also expected.
This followed Hulamin’s warnings in April that both EPS and HEPS would fall by more than 20% as production volumes for the six months to June 30 fell by 17% year-on-year.
Despite improved plant loading and the installation of on-site supplementary generating sets, the company was unable to offset the lost output as a result of electricity supply curtailments, a two-week-long maintenance shutdown and quality issues on two product lines during the first quarter of the year.
Further, the fall in the London Metal Exchange- (LME-) quoted aluminium price from $1 832/t in January to $1 646/t in June had resulted in a pre-tax loss of R55-million.
Geographic premiums, which were added to the LME base metals price, fell sharply in the second quarter to under $200/t after recording levels above $500/t in late 2014.
Hulamin expected to release its results for the six months on July 27.
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