PRICES AND VOLUME JUMP
Weak rand takes Hulamin to record
The aluminium maker produces the best set of annual results in its history on greatly improved production
Hulamin produced the best set of annual results in its history on greatly improved production, tighter capital controls and a weaker rand against the dollar.
The aluminium maker says it performed particularly well in the second half of the year. This led to normalised headline earnings per share soaring 116% in the year.
Turnover jumped to R10.1bn in 2016, from R8.4bn in 2015.
This was driven by substantially higher sales volumes, aluminium prices that jumped an average 24% during the year and a weaker currency.
"They were excellent results," Evan Walker, portfolio manager at 36One Asset Management, said on Monday.
"They were fortunate in this period to have a reasonably weaker rand and high commodity prices.…
"Operationally, the business is in way better shape than it was a couple of years ago — and this is coming through in the cash flow," he said.
Group sales volumes for 2016 rose 17% to 232,000 tonnes. Rolled products were the biggest contributor. Cash flow before financing activities improved sharply to R415m from a R420m outflow in 2015.
The operational performance at the Isizinda casthouse in Richards Bay continued to improve, the group said. It holds a 40% stake in the former BHP Billiton aluminium asset, with empowerment partners holding 60%.
This reduced the cost of rolling slab and enabled the more flexible use of working capital, Hulamin CEO Richard Jacob said on Monday.
But demand for beverage can stock faltered in the first half before recovering.
Hulamin said conditions in SA and around the world were "tentative" throughout 2016. It exported heavily to markets in the US, EU and Middle East. Dollar selling prices improved on levels in the first half. For the full year, however, margins were softer than in 2015.
Manufacturing output was consistent throughout the period, while improved product yields, lower unit costs and a higher level of value-added products made significant contributions to better profitability.
The London Metal Exchange aluminium price continued to rise in the second half of 2016 to close at $1,713 per tonne, resulting in a profit from metal price lag of R50m for the full year from a loss of R161m in 2015.