Rolled aluminium
Photo by: Bloomberg
JSE-listed aluminium semi-fabricator and supplier Hulamin’s response to the hardships of 2019 and 2020 has paid off with a return to profitability in 2021.
The group posted a 760% year-on-year rise in operating profit to R538-million for the year ended December 31, 2021, on the back of increased volumes, higher realised prices and growth in local sales.
This compares with a loss of R81-million reported for the 2020 financial year.
Basic earnings a share of 192c were 347% higher than the 78c loss a share posted in 2020.
Normalised earnings before interest, taxes, depreciation and amortisation, which excludes the metal price lag, increased by 254% year-on-year to R152-million in the year under review.
Hulamin did not declare a dividend in the year under review.
The company says its performance in the reporting year was supported by local sales growth of 54% year-on-year to 90 000 t for aluminium rolled products, particularly in the beverage can market, and the imposition of import duties on aluminium flat rolled products into South Africa.
Sales volumes overall grew by 34% year-on-year to 222 000 t.
The year under review also saw the Hulamin Extractions division performing well, following the completion of a turnaround plan in 2020.
Hulamin had R149-million of cash and cash equivalents on hand at the end of 2021, while net debt stood at R703-million.
So far in 2022, the company has witnessed solid demand, firmer prices compared with recent years and a reasonable rand:dollar exchange rate.
Should these conditions continue, CEO Richard Jacob expects healthier trading conditions to persist, albeit without the metal price lag benefits experienced in 2021.
He assures stakeholders that the underlying business health of Hulamin has improved considerably and that the improvements evidenced in 2021 are expected to continue.
However, liquidity is expected to be a challenge in 2022, owing to rising working capital as a result of the rising London Metal Exchange price.
To this end, Hulamin plans on managing its cash cycle by way of increased sales to customers offering supply chain financing programmes and metal procurement on short commitment cycle; deferring non-urgent operational and capital expenditure; and improving supplier credit facilities.