JSE-listed Hulamin’s earnings for the year ended December 31, 2015, trended downward as the weak London Metal Exchange- (LME-) quoted aluminium price resulted in a lag that was exacerbated by China’s entry into the South African aluminium manufacturer’s traditional markets, particularly during the last half of the year.
Hulamin on Monday posted a 57% decrease in earnings a share to 51c for the 12 months under review, and a 67% fall in headline earnings per share (HEPS) to 37c.
Normalised HEPS decreased 50% to 55c, with the metal price lag, which widened from R53-million in 2014 to R161-million for the year to December 31, negating any currency gains from a weakened rand.
Net profit for the period attributable to equity holders plunged to R163.7-million from R384.9-million in 2014, while operating profit decreased from R585-million in 2014 to R295-million in 2015.
Despite a 7% decline in sales volumes to 198 000 t and the lower aluminium price, turnover increased from R8-billion in 2014 to R8.4-billion for the year under review.
During the year under review, China-based competitors significantly increased their exports into Hulamin’s traditional US and European markets, besides others, after a considerable slowdown in the Asian nation’s economy, resulting in a significantly oversupplied market, CEO Richard Jacob said on Monday.
The Chinese primary aluminium price, coming in lower than the LME price, had also contributed to the reduced rolling margins, which had seemingly now stabilised at lower levels.
With these two challenges remaining a concern for Hulamin, the company was battening down its hatches and would continue its cost-cutting and efficiency improvement programmes to mitigate prolonged challenging market conditions, Jacob told Engineering News Online.
Hulamin had improved its volumes and operating efficiencies despite liquid petroleum gas and electricity supply disruptions impacting manufacturing output and planned maintenance activity, plant upgrades and quality rework on two product lines.
The company expected the momentum achieved in terms of improved manufacturing performance in the second half of the year to continue into 2016, while the price crunch was expected to be partially offset by actions and initiatives currently being taken to preserve cash, optimise sales and achieve cost efficiencies, while benefiting from a weaker rand.
Hulamin did not declare a final dividend for the year in light of the current uncertain market and economic outlook, with weak market conditions expected to persist both locally and internationally.