Hu­lamin brings smiles to in­vestors

Surge in earn­ings fore­cast

The Star Early Edition - - COMPANIES - Sandile Mchunu

ALU­MINIUM sup­plier Hu­lamin in­formed its share­hold­ers yes­ter­day that it ex­pected a surge in earn­ings a share of be­tween 127 per­cent and 141 per­cent for the year to the end of De­cem­ber.

The com­pany at­trib­uted the ex­pected surge in earn­ings to a strong man­u­fac­tur­ing per­for­mance last year.

If the com­pany achieves the earn­ings, it will re­port earn­ings of 116 cents to 123c a share for the year, up from 51c a share re­ported at the end of the pre­vi­ous fi­nan­cial year.

Hu­lamin’s share price thrived on the good news.

“This pos­i­tive mo­men­tum, achieved with an ex­cel­lent safety record, pro­vides a solid base for fur­ther fo­cus and im­prove­ments go­ing into 2017,” the com­pany said.

Hu­lamin also noted that its rolled prod­ucts had ben­e­fited from con­sis­tent in­vest­ment in op­er­a­tional ex­cel­lence and risk man­age­ment to achieve record sales vol­umes of 214 000 tons for the year un­der re­view.

The lo­cal sales of rolled prod­ucts in­creased to more than 70 000 tons.

“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 util­i­sa­tion of Hu­lamin’s re­cy­cling ca­pac­ity in the sec­ond half,” the com­pany added.

Growth

Im­prove­ment is also ex­pected in head­line earn­ings a share. The com­pany an­tic­i­pates a growth of be­tween 208 per­cent and 227 per­cent for the year.

The com­pany said it per­formed well in the sec­ond half of the year, de­spite the strength­en­ing of the rand and a rel­a­tively sta­ble London Metal Ex­change price en­vi­ron­ment, to de­liver a record op­er­at­ing profit for the full year.

The im­proved profit per­for­mance and cap­i­tal dis­ci­pline al­lowed the com­pany to im­prove cash flows in the sec­ond half. Net bor­row­ings were re­duced by some R350 mil­lion af­ter clos­ing at R952m at the end of June last year.

There is no doubt that Hu­lamin will im­prove on last year’s re­sults, when it re­ported a 57.47 per­cent de­cline in prof­its to R163.71m, down from R384.93m a year be­fore. The de­cline forced the com­pany to forego pay­ing a div­i­dend. With an ex­pected im­prove­ment in profit in 2016, share­hold­ers must be ex­pect­ing some re­wards this time around.

Hu­lamin chief ex­ec­u­tive Richard Ja­cob said last year that the de­cline in profit was a re­sult of a slump in com­mod­ity and alu­minium prices.

The com­pany is cur­rently fo­cus­ing on main­tain­ing the pos­i­tive mo­men­tum in the busi­ness. It will re­lease the full-year re­sults at the end of Fe­bru­ary.

Hu­lamin’s share price rose 12 per­cent on the JSE yes­ter­day to close at R7.

PHOTO: SUP­PLIED

Alu­minium coils in the Hu­lamin fac­tory. The com­pany re­ported a strong man­u­fac­tur­ing per­for­mance for last year and has pre­dicted a pos­si­ble 141 per­cent in­crease in earn­ings a share for the year to the end of De­cem­ber.

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