Hulamin normalised earnings up, outlook positive

The underlying performance and a more “balanced” order book during the six months ended June 30, has sparked encouragement that JSE-listed Hulamin would see more positive gains after a “tough few years”.

The aluminium products producer on Monday posted a 32% decline in headline earnings a share (Heps) for the period under review; however, normalised Heps showed a 17% rise on the prior period.

After implementing a required reinstatement following the implementation of the revised accounting standard, IAS 19r, in 2012, Hulamin recorded Heps and basic earnings a share of 21c, compared with the restated 31c and 36c in the prior corresponding period.

Headline earnings fell from R98.2-million in the six months to June 2012, to R66.4-million during the first half of 2013, while normalised earnings jumped to R91.2-million in the interim period, from an R11.3-million loss in the corresponding period the year before.

“Hulamin produced a substantial improvement in normalised earnings during the six months to June, drawing from ongoing cost management and production efficiency drives, the weaker rand that benefitted exports and the fundamental turnaround at Hulamin Extrusions,” said CEO Richard Jacob.

Group revenue rose by 13.1% to R3.6-billion during the six-month period, up from the R3.1-billion reported during the six months to June 2012, with higher sales volumes offset by a lower aluminium price.

Hulamin’s Rolled Products division generated revenue of R3.2-billion during the six months, while the Extrusions unit recorded increased revenue to R382-million.

Underlying operating profit – before exceptional items and metal price lag – rose to its highest level since 2006, reaching R187-million in the interim period, compared with a loss of R1-million during the first half of 2012.

Operating profit following the reinstatement fell to R122-million, from the R183-million achieved in the six months to June 2012.

Net profit reached R66.3-million, down from the restated R113.8-million recorded in corresponding period the year before.

Hulamin aimed to regain momentum with improved sales volumes and better yields in the second half of the year.

Hulamin was also expected to incur one-off severance costs, accounted for in the first-half results, of R35-million, as it shed 140 jobs. About 70 people had already left the company, as Hulamin moved to a more optimal human resource level.

Meanwhile, the company has secured a “full and balanced” order book, despite subdued local demand.

Jacobs commented that Hulamin was preparing to deliver the first of its aluminium can body stock to Nampak’s Bevcan division during August.

Hulamin had been contracted to supply 28 000 t of the aluminium sheeting from 2013 to 2015, as Bevcan starts replacing its tin-plated beverage cans with aluminium-bodied beverage cans later this year.

The company said it had made good progress in developing the product, which is new to Hulamin’s portfolio, to international quality specifications and had commercially trialled it successfully in Europe over the past year.

The group was currently expanding its existing recycling facilities to allow for potentially higher volumes of this successfully recycled packaging product.