Hulamin expects better fortunes
Hulamin’s 2016 financial year brought a turnaround in fortunes following a torrid 2015. Under the leadership of CEO Richard Jacob, the company said on Monday it expected to more than double its fullyear earnings when it reports its results later in February.
Hulamin’s 2016 financial year brought a turnaround in fortunes after a torrid 2015.
Under the leadership of CEO Richard Jacob, the company said on Monday it expected to more than double its full-year earnings when it reports its results later in February.
Investors welcomed the news and sent the share price rallying 12% to a high of R7.50, a price last seen in April 2015.
In its annual results for endDecember 2015, Hulamin’s earnings more than halved as global market conditions in the commodities sector deteriorated significantly. Operating costs were eating into profit margins. Management resolved to cut costs and improve efficiencies.
In the year to end-December 2016, Hulamin said it had achieved record sales of 214,000 tonnes for its rolled products due to its initiatives. Local sales of rolled products increased to more than 70,000 tonnes.
About 80% of Hulamin’s revenue comes from rolled products, with the rest from extruded products. Hulamin supplies the domestic industry and exports to Europe, North America, the Middle East and Asia.
“Hulamin performed particularly well in the second half of the year, despite the strengthening of the rand, to deliver a record operating profit for the full year, which was achieved in a relatively stable London Metal Exchange,” the company said.
Headline earnings per share (Heps) for the year to endDecember were expected to jump by between 208% and 227% from Heps of 37c in the year-earlier period.
The company said the improved profit and capital discipline allowed the company to boost cash flows further in the second half, resulting in Hulamin reducing its net borrowings by about R350m after closing at R952m at the end of June 2016.
Hulamin was focused on maintaining the positive momentum, raising selling prices, improving operations
and cutting costs, it said.
The price of rolled aluminium on the London Metal Exchange rose 12% in 2016.
On the Shanghai Futures Exchange, it was 18% higher. Prices could come under pressure in 2017 due to oversupply in the market, analysts say.
China, the world’s biggest producer, is preparing new plant and restarting idled capacity to take advantage of higher prices.
At the close of the JSE on Monday, Hulamin’s share price was up 12% to R7, valuing the company at about R2.24bn.