Firm hit hard by global meltdown

2009-07-23 00:00

THE global economic recession hit Pietermaritzburg’s giant aluminium semi-fabricator, Hulamin, hard during the first six months of this year, as operating profit slumped 57% year on year to R114 million from R270 million.

The chief executive of the JSE-listed company, Alan Fourie, told The Witness yesterday he has never experienced such a dramatic downturn, but he added that the company remains well placed for the second half of 2009.

Sales volumes dropped 34% year on year during the first half of 2009 to 71 000 tons. Fourie said the first quarter of this year was particularly painful, bringing in a mere R22 million.

This is in stark contrast to the second quarter, which brought in R92 million. Headline earnings per share (Heps) dropped 85% year on year to 12 cents per share from 84 cents per share.

The good news is that the company remains profitable during a very challenging period that has already seen other competing manufacturers across the globe incur losses amounting to hundreds of millions of dollars.

Fourie said Hulamin has taken measures to increase its market share and that it has weathered the storm without having to retrench any permanent staff in Pietermaritzburg.

Hulamin, which employs about 1 600 people in the city, is back to a seven-day production week.

Fourie expressed confidence going forward, adding that the fact that Hulamin has come through with positive earnings highlights the compnay’s sound business model. “There are not many businesses that are in our position.”

Sales orders for the second half of this year are roughly in line with last year’s second-half figures.

The board has decided not to declare an interim dividend.

Fourie said four key sectors were hit hard by the downturn — automotive, construction, general engineering and transport.

The sharp reduction in sales volumes are a result of two factors, he added, namely a slump in end-user demand and de-stocking down the pipeline, which ultimately impacted on Hulamin.

Local and international demand remained poor during this period. A weaker rand in early 2009 assisted Hulamin, which is a major exporter.

However, Fourie is concerned about the recent strength of the currency against the U.S. dollar.

The company’s rolled-products expansion project, worth almost R1 billion, will be operational by September 2009.

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