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While noting that it was not possible to forecast the extent of electricity curtailment over the remainder of the year, aluminium manufacturer Hulamin says it is “already clear” that its earnings per share (EPS) and headline earnings per share (HEPS) for the six months to June 30 will be more than 20% lower than those of the first six months of the prior year.
The company outlined in a trading update on Thursday that first-quarter manufacturing output had been severely impacted by electricity supply curtailments by energy utility Eskom, as well as quality issues on two product lines.
Hulamin operated a complex serial manufacturing process that ran on a continuous basis and, as a result, lost production could not be recovered.
“Product temperatures must be carefully maintained within certain parameters throughout the manufacturing process and power shortages impact exponentially on the quantum of production lost.
“When load curtailment is enforced, Eskom currently provides Hulamin with an instruction to curtail its average power demand to between 80% and 90% of its baseline demand. [The utility is, however,] unable to provide advance notice of load curtailment and the frequency of curtailments has increased significantly in the last 30 days,” outlined the group.
It added that it was installing generating sets during a planned maintenance shutdown in early May, which would largely mitigate the future impact of stage 1 or 2 load-shedding.
Hulamin expected to release its results for the six months on July 27.