Hulamin FY results shine on record sales, triple-digit earnings rise

Despite uncertain trading conditions, JSE-listed Hulamin delivered a “record” set of financial results for the year ended December 31, with an improved sales and manufacturing performance expected to roll over into this year.

Hulamin ended the 2016 financial year with record sales, triple-digit earnings increases and strong cash flow, despite a stronger currency environment during the second half.

“This set of results is based on a much improved and more consistent manufacturing performance, tighter capital discipline and a weaker rand against the dollar,” said Hulamin CEO Richard Jacob on Monday.

While Jacob, who was particularly pleased with the group’s operational performance, was cautiously optimistic of continued momentum during this year, the strengthening rand slightly “dampened” Hulamin’s outlook.

“Should the rand continue to firm against the dollar . . . this is likely to put pressure on [our] financial performance,” he said.

However, despite a “few uncertainties”, Hulamin’s plant continues to perform and “healthy demand” for its products is expected throughout 2017.

The company is increasing its activities in sourcing all forms of scrap as the recycling facility has been fully commissioned and is contributing to overall business performance.

Meanwhile, headline earnings a share during the year to December 31, 2016, surged 222% to 119 c, while basic earnings a share jumped from 51 c in 2015 to 120 c in 2016.

Profit before tax increased from R228.9-million in 2015 to R534.8-million in 2016.

“Aside from the increased variable costs such as packaging, material costs, alloying elements and certain components of energy cost, which are also sensitive to currency and commodity prices, we maintained tight controls over employment, maintenance and energy costs,” Jacob added.

While market conditions remained “tentative” throughout 2016, manufacturing output had remained consistent and improved product yields, lower unit costs and a higher level of value-added products had bolstered profitability.

Group sales volumes for the 12 months under review increased 17% to a record 232 000 t, attributed to Hulamin Rolled Products, which had improved its sales volumes by 19% to 214 000 t.

Hulamin achieved an increase in turnover to R10.1-billion in 2016, compared with the R8.4-billion achieved in 2015, owing to the higher sales volumes, in addition to a 24% increase in the average rand London Metal Exchange (LME) price and the weakening of the rand against the dollar.

The LME aluminium price closed the year at $1 713/t, resulting in a metal price lag profit of R50-million for the full year, compared with the loss of R161-million in 2015.

Hulamin, which declared a dividend of 15c a share for the year, also posted strong cash flow of R415-million for the year under review.