Hulamin brings smiles to investors
Surge in earnings forecast
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.