Hulamin shares tumble after company flags drop in interim earnings

HULAMIN, the maker of aluminium products, saw its share price drop by over 9% on Tuesday afternoon after the company said it expected interim earnings to drop substantially, as load shedding impacted production.

Hulamin said manufacturing output in the first quarter fell sharply due to electricity supply curtailments and quality issues on two product lines. It said the installation of onsite supplementary generating sets had lessened the impact during the second quarter.

"However, given the continuous nature of operations and the impact of a two week planned maintenance shut, it was not possible to make good the lost output and production volumes finished 17% lower than those achieved in the comparative period," the company said.

In the six months ended June 2015, Hulamin said it expects to report a dip in headline earnings per share (HEPS) of between 39% and 44% from the HEPS of 41c recorded in the year-earlier period.

The benefit of a weaker rand, while significant, was not sufficient to counter the impact of the lower volumes and the lower price for aluminium, the company said.

The impending results will be a far cry from those reported in February this year.

In that report, Hulamin saw record results in the year to end December as normalised earnings rocketed 76% and headline earnings per share skyrocketed 96%, with operating cash flows soaring 83% to R518m.

This saw the company declare its first cash dividend since financial 2008 as it resumed its dividend payment policy of three-times dividend cover.

The stellar result came as higher aluminium production boosted revenue. This was further fuelled by a 12% fall in the rand-dollar exchange rate.

At 1.49pm, the share was down 9.31% to R5.55, valuing the company at about R1.96bn.