Hulamin slumps to first-half loss amid restructuring
CEO says aluminium supplier experienced challenging trading conditions during the first six months of 2019
Aluminium supplier Hulamin, whose customers include Tesla, slumped to a net loss of R73.2m in the six months to end-June partly because of restructuring costs and reduced demand for some products.
“Hulamin experienced challenging trading conditions during the first six months of 2019,” said CEO Richard Jacob.
“Export sales to the US were disrupted by blockages in our distribution channel, customer overstocking, and a softening underlying market.”
The Hulamin Extrusions unit made a first-half loss, partly because of provisions for restructuring costs.
“We are making good progress in rightsizing the business to achieve a lower unit cost base; turning the losses around and releasing cash,” Jacob said.
Hulamin said restructuring costs in the period were R37.6m. Business Day reported in May that the group’s Hulamin Extrusions division had sent out retrenchment notifications to staff. The company was said to be considering laying off as many as 200 employees.
Hulamin’s total net loss of R73.2m followed a profit of R84.8m a year before. Revenue edged 1% lower to R5.2bn.
“Hulamin expects the turnaround actions to gain momentum in the second half, and these are forecast to start yielding ongoing benefits from 2020,” the company said.
Order books for the rolled-products business “are filling for the balance of the year” and were only likely to normalise during the fourth quarter “as contracting with our North American customers gains momentum”.
The rand’s slide in recent months could boost earnings in the second half, unless the currency changed course, although “a number of nonrecurring costs are expected to be incurred”.