A slow recovery from Covid

Much of the attention over the past year has been focused on the frontline consumerfacing businesses whose revenues have been wiped out by the pandemic, but the effects ripple all the way back up the supply chain. For an operation like Hulamin, which was already struggling in 2019 and had begun to implement a turnaround plan, the impact could have been catastrophic. It is a credit to the company that despite the exceptional circumstances, it managed to lose only a fraction of what it had lost the year before.

Hulamin had been suffering disruptions of its US supply chain, and there were rumours of an antidumping case in the US. This was swiftly followed by Covid taking a chunk out of its European markets in the first quarter. Then the second quarter brought the impact of the declaration of a national state of disaster in SA, with ports and factories closed. Even when the ban on alcohol sales was loosened, the collapse in economic activity and a general attitude of risk aversion made local demand suffer and pushed down sales.

By the second half operations had begun to regain momentum, and the impact of the turnaround plans that were started in 2019 began to be felt. These focused on cost reductions, operational efficiency, the rebuilding of distribution channels and the consolidation of operations. It meant that though turnover dropped 20% and volumes 24%, headline loss improved to R210m from R240m the previous year. The order books look healthy, and as the impact of the pandemic starts to dissipate, Hulamin’s return to profitability should continue.