He tells Engineering News that this is evidenced by the company’s net-debt-to-equity ratio of 16%.

He further points out that the company, which is undergoing a necessary turnaround, continues to invest in technology and to align the business to new market developments, such as the emergence of electric vehicles.

In addition, there are some elements of the business that continue to perform well, such as the beverage business, which grew by over 60% in South Africa during the six months ended June 30.

The company’s unaudited results for the period showed a 1% year-on-year decrease in revenue to R5.25-billion.

Hulamin reported a headline loss of R63-million for the period, a 174% year-on-year decrease, as a result of losses incurred by Hulamin Extrusions, restructuring costs and a negative metal price lag.

Hulamin Extrusions suffered a first-half loss, which included a provision for restructuring costs. Sales volumes were also lower as a result of an equipment malfunction and the consequent disruption to production.

Jacob says imports of cheaper Chinese products into South Africa have placed pressure on Hulamin’s selling prices and, therefore, forced the company to cut costs.

The company has decided to close its Olifantsfontein plant and increase volumes at its Pietermaritzburg plant. Some of the Olifantsfontein employees will be transferred, but 200 jobs will be lost.

Jacob notes that the turnaround of Hulamin Extrusions is 75% complete and that it will be concluded in November.

On the rolled products side, he says, the challenges are more complicated in that the underlying market conditions in the automotive sector have been soft, particularly in South Africa.

Moreover, in South Africa, a number of sales have not materialised, largely owing to blockages in the distribution channel.

This resulted in Hulamin having bought more metals than it sold, and stocks have risen. This, however, is a “fairly short-term and surprising blockage”, notes Jacob, adding that Hulamin has already started turning the rolled products business around.

The company has stopped buying metal and the working capital problem is largely out of the way.

Moreover, it has engaged a number of other customers in the US, and orders are beginning to materialise from this, notes Jacob.

Hulamin has also started a cost-cutting programme in the rolling business. This is about 50% complete.

“We are making good progress in rightsizing the business to achieve a lower unit cost base, turning the losses around and releasing cash,” says Jacob.

He also expects conditions to improve to some extent in the second half of the year, but warns that normal business activity will only resume in 2020.

“We will continue to make improvements and implement turnaround actions in the second half of the year, so that 2020 is a much better year.”

Parallel to this, Hulamin will continue to protect its balance sheet and secure cash.