Despite using scrap and focusing on reducing costs, rolled aluminium products manufacturer, the JSE-listed aluminium producer Hulamin, recorded a fall in half-year volumes, turnover and earnings although it has started to see an uptick in demand for its produce.
Earlier this year, Hulamin acquired 58.7% of the equity interest in Isizinda Aluminium, bumping up its control in the company to 100%.
In June, Hulamin, however, suffered a fire outbreak at its Coil Coating Line which mainly impacted the company’s export can end and tab markets although repair works are on schedule, with production expected to resume next month.
Mark Gounder, the Hulamin CEO, said yesterday that demand for the company’s production had “started to improve in the first half of 2024, especially in the second quarter to June following a period of abnormally weak demand” in its export markets.
Local demand for Hulamin had remained robust, it said, although investors in the company responded negatively, with its share price on the JSE plunging 8.1% to R3.85 yesterday, although its stock is up by 3.2% and 19% in the past 30 days and 90 days respectively.
During the half-year period under review, turnover in Hulamin dipped by 6% to R7 billion, impacted by lower volumes. The company’s overall production fell by 4% for the period to 92 150 tons due to the displacement of 8 757 tons of low margin hotband and market challenges that impacted its extrusions business segment.
As a result , Hulamin’s headline earnings per share for the interim period to June 2024 decreased by 17% to 79 cents per share, including the R152 million positive impact of a metal price lag.
This had arisen from “the timing difference between the purchase and selling price” of aluminium metal.
Hulamin said it had continued with its strategic focus on simplifying the product range, increasing scrap utilisation, reducing costs and delivering its market-driven capital expenditure to position the business to take advantage of structural growth in markets.
“As a result, while the first half of 2024’s overall performance was lower than that of H1 2023, it represented a notable improvement compared to H2 2023,” said the company.
Its commitment towards positioning the group for long-term growth had been boosted by the allocation of R99m towards projects that will enable the production of wide can body and enable increased scrap utilisation.
Local sales for the half year to June constituted 55% of total rolled products volumes compared to 47% in the previous period. Can sales have remained a strategic focus for the business as it views this as a long-term structural growth market.
Recovery in Hulamin’s export market segment has, however, been temporarily set back by the fire outbreak incident at the company’s Coil Coating Line.
Management was focusing on optimising the available plant capacity towards higher margin products and a comprehensive focus on cost curtailment in line with reduction in volumes.
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