JSE-listed Hulamin’s financial report for the half-year ended June 30 shows a continued uptick in earnings, with expectations that the upward double-digit momentum will continue into the second half of the year.

The company on Monday reported a 17% rise in basic and headline earnings a share to 56c for the first half of the year under review, from 48c in the prior corresponding period last year.

Operating profit was up 11% to R286-million during the first half of this year, despite a stronger local currency, while Hulamin’s attributable earnings increased 17% to R178-million for the six months under review.

“Hulamin has delivered a strong manufacturing performance and improved financial results, despite difficult market conditions and the rand being 14% stronger compared with the corresponding period in 2016,” explained Hulamin CEO Richard Jacob.

Speaking to Engineering News Online, he pointed out, however, that Hulamin had been working hard over the past 18 months on improvements and had “upped its game quite considerably” with regard to the efficiencies and cost savings of its plants and manufacturing performance in an effort to weather any potential volatility it might face.

“We will compensate for weak local market conditions with further improvements in sales mix, cost controls and operating efficiencies,” Jacob assured shareholders.

A number of concurrent shutdown activities are planned for September to undertake routine maintenance and upgrades that are expected to result in further improvements.

In addition, Hulamin is progressing the conversion of its manufacturing facilities from liquid petroleum gas to compressed natural gas (CNG), which will increase its use of CNG to around 45% of the company’s total gas consumption.

CNG currently accounts for some 25% of Hulamin's total gas consumption.

The steady increase in CNG use, in addition to lower dollar-denominated costs and improved cost control led to an aggregate 1% reduction in manufacturing conversion costs in rolled products and an 8% drop on a per unit cost basis.

Meanwhile, group turnover for the six months to June 30 increased 3% to R5.1-billion on the back of higher sales volume and an average 22% higher dollar aluminium price.

The dollar London Metal Exchange aluminium price rose further to close the period under review above $1 900/t, following the lows of below $1 500/t that had prevailed in late 2015 and early 2016.

Hulamin recorded a metal price lag profit of R78-million in the first half of the year.

Group sales volumes for the half-year increased 8% to 119 000 t, delivering a 12-month sales performance exceeding 220 000 t during the period from July 1, 2016, of rolled products.

“The increase in these factors more than compensated for the 14% strengthening of the rand to average $13.22,” he said.

Despite the overall manufacturing economy declining, Hulamin had increased its local beverage can packaging volumes by 133% in the first half, albeit from a relatively low base in the corresponding period, with a consequent increase in scrap purchases.

Further, Hulamin Extrusions performed consistently compared with the prior period, despite further weakening of local market conditions.

“The investments in powder coating and packing are due for start-up in the second half [of the year and] that augurs well for an improved performance from 2018,” Jacob concluded.