“Our manufacturing performance showed some improvement with recoveries increasing off a low base. Sales of rolled products are up by 9 per cent from the second half of last year which, together with a slight improvement in conversion margins, underpinned our earnings growth, supported by the weaker rand,” David Austin, acting CEO of Hulamin, said in a statement.
“This improved profitability, together with sound working capital management, produced strong cash flows that we used to pay down borrowings. Our efforts to improve operational performance are ongoing and should contribute to increased volumes and profitability in the second half.”
[DATA HLM:Hulamin] is an international manufacturer of high quality rolled and extruded aluminium products and is based in South Africa.
Revenue for the half year ended 30 June 2014 increased to four billion rand from 3.5 billion rand in the previous comparative period. Gross profit also increased to 453.1 million rand from 320.2 million rand in 2013. Headline earnings per share increased by 95 per cent from 21 cents to 41 cents.
(READ MORE: Hulamin H1 HEPS down 23 per cent)
Normalised earnings for the half-year ended 30 June 2014 were reported at 130 million rand, an increase of 42 per cent over the corresponding period in the previous year, and 18 per cent over the 110 million rand achieved in the second half of 2013.
Hulamin reported an operating profit of 210.3 million rand for the period under review from 122.7 million rand in 2013. Profit before tax was however recorded at 182.7 million rand for the half-year ended 30 June 2014 from 91.8 million rand in the previous comparative period.
“Internationally, economic conditions showed some improvement but excess capacity in flat rolled products ensured the industry remains fiercely competitive and Alcoa have announced the closure of two flat rolled product plants in Australia,” Hulamin explained.
“Locally, economic conditions are very challenging, exacerbated by the disruptions caused by ongoing strikes.”
Revenue for Hulamin rolled products increased to 3.7 billion rand from 3.1 billion rand in 2013, while Hulamin Extrusions’ revenue decreased to 344.5 million rand for the period under review from 382 million rand.
(READ MORE: Hulamin reports steady improvement in 2013 FY)
The construction of a new 300 million rand recycling plant in Pietermaritzburg is expected come on line in mid-2015, and Hulamin added that the rate of acceptance in South Africa of all-aluminium cans bodes well for recycling plant.
“Ongoing actions being taken to improve operational performance at Rolled Products are expected to increase volumes and profitability in the second half of the year. However, imports remain a threat to local markets,” said Hulamin.
“Hulamin’s profits will continue to be impacted by the relative weakness or strength of the South African rand against other currencies and, in particular, its rate of exchange with the US dollar.”