Hulamin expects a decline in earnings

JSE-LISTED aluminium supplier Hulamin said on Friday that it expected its basic earnings per share (Eps) basic headline earnings per share (Heps) for the six months to end June to decline by at least 55 percent as compared to the same period last year.

The group attributed this decline to a stronger rand against the US dollar during the period. Last year the group reported basic earnings per share and headline earnings per share of 56 cents a share. In the upcoming results the group expects to report basic Eps and Heps of not higher than 25c.

“The stronger average level of the currency for the four months to April 2018 of R11.98/ US dollar relative to the comparative period of R13.29/US dollar has had a negative effect on profit before metal price lag, amounting to approximately R87 million,” the group said on Friday. “In addition, the fall in the rand aluminium price, driven by the appreciable strengthening of the rand, has resulted in an adverse metal price lag of R100m over the four months to date. Conversely, a positive metal price lag of R78m was recorded in the six months to end June 2017. The rand aluminium price has risen since April 2018, but remains volatile,” the group added.

However, the group said that it continued to deliver strong underlying profit performance measured in constant currency operating profit before metal price lag, in a challenging environment by building on the momentum established since 2016. In the last half-year results, Hulamin delivered a 17 percent increase in headline earnings to R178m, while turnover increased by 3 percent to R5.1 billion. Earnings before interest and taxation were 11 percent higher at R286m and sales volumes were up by 8 percent to 119 000 tons.

Going forward the group said that it remained focused on delivering on its mediumterm objectives of raising conversion fees (rolling margins), increasing scrap consumption and other cost reductions and efficiency gains, thereby improving underlying profitability, while positioning the company for growth. Hulamin expects to release the half-year results on or about July 30.

The share price traded in negative territory on the JSE on Friday before gaining 1.04 percent to close at R4.85.