JSE-listed Hulamin's shares rose by 11.68% on Monday morning after the company announced it expects a triple-digit surge in earnings for the year ended December 31, as a strong manufacturing performance delivered record sales volumes.
Headline earnings a share for the 2016 financial year are expected to be 208% to 227% higher at between 114c and 121c apiece, compared with the 37c a share posted in 2015.
Hulamin’s earnings per share (EPS) are expected to increase by between 127% and 141% to between 116c and 123c for 2016, from 51c apiece in 2015.
Normalised EPS are expected to reach between 114c and 121c for 2016, a 107% to 120% increase on the 55c achieved in the prior year.
“Hulamin performed particularly well in the second half of the year, despite the strengthening of the rand, to deliver a record operating profit for the full year, which was achieved in a relatively stable London Metals Exchange (LME) price environment,” the company said in an update to shareholders on Monday.
Hulamin, which aims to publish its 2016 financial year-end results on February 27, believed the positive momentum provided “a solid base for further focus and improvements” during the 2017 financial year.
Hulamin’s rolled products division achieved record sales volumes of 214 000 t for the year under review, with strong improvements in yields and recoveries, unit costs and the mix of high-value products.
Local sales of rolled products increased to more than 70 000 t.
“Sales of can body stock improved strongly in the second half after the slow start to 2016. This increase in demand allowed for an increase in scrap purchases and improved use of Hulamin’s recycling capacity in the second half,” Hulamin said.
The extrusions and containers units also both performed better in 2016 than in 2015.
Cash flows were improved in the second half of the year, owing to the positive profit performance and capital discipline, with net borrowings reduced by another R350-million after closing at R952-million at the end of June 2016.
“Hulamin is focused on maintaining the positive momentum in the business, increasing rolling margins (selling prices), improving operational performance and making further reductions in manufacturing cost,” the company concluded.
The company's shares rose to R6.98 on Monday morning, compared with Friday's close of R6.25.