Hulamin warns of loss due to high fixed costs
The aluminium supplier has said 2019 was unusually challenging
Aluminium supplier Hulamin, whose customers include Tesla, warned on Friday it had swung into a loss in its year to end-December, having said previously that declining sales took a bite out of profits of a business characterised by high fixed costs.
The group said it expected to report a headline loss per share of between 70c and 80c, and up to 187.9% decline from the prior comparative period.
Hulamin has said previously it experienced “unusually challenging” conditions in 2019, amid weak market conditions both locally and internationally.
This resulted in Hulamin Rolled Products sales volumes declining 10% to 204,000 tonnes.
“Due to the high fixed manufacturing cost base of the business, the impact on operating profit of this sharp reduction in volume has been severe,” the group said in a trading update in March.
The group has said previously it also saw production disruptions during the period, and had made writedowns related to deteriorating market conditions.
Aluminium prices were under pressure in 2019, amid slowing demand in China.
In morning trade on Friday Hulamin's share price was up 6.84% to R1.25, having fallen 45.65% so far in 2020.