Hulamin shows its resilience

2012-02-21 00:00

HULAMIN showed its resilience in a market that posed significant challenges in 2011.

Rolled products and extrusions grew sales in a depressed market.

The Pietermaritzburg-based aluminium semi-fabricator increased its turnover for the year ended December 31, 2011, by 20% to R6,96 billion.

It yesterday reported a seven percent increase in headline earnings to R80 million.

The JSE-listed company will focus on strengthening local demand for its products while continuing to achieve operational efficiency in the year ahead.

The focus on local clients is particularly savvy as it will ensure that the impact of a potential fallout in the European market is mitigated.

Sales volumes of rolled products, which Hulamin has invested in heavily, grew 11% to 208 000 tons.

CEO Richard Jacob told The Witness yesterday that he was pleased with the results.

He said his aim was to grow local sales as the bulk of the volume recorded in 2011 came from exports.

Foil sales, which grew by eight percent year on year, were disappointing given the amount of money invested in extra capacity in this division of the business, he added.

The company boasts a diverse geographical split of export markets. Major markets include the United States, Europe and the Middle East and Asia. Despite the surfacing of global economic jitters on the back of a potential recession in Europe, the export market is expected to remain relatively stable.

Sales of extrusions grew 14% year on year.

Jacob said the lower aluminium price posed a challenge for the company.

“Given the volatile nature of the LME [London Metal Exchange] aluminium price, Hulamin retained its 50% hedge of the U.S. dollar value of its aluminium inventory pool.

“This metal price lag impact of the fall of the aluminium price in the second half on the current year’s income statement is a loss of R34 million on the value of Hulamin’s metal inventories.”

Rising energy costs and the insecurity of energy supply cost the company a great deal of money.

The company had to spend an additional R13 million to buy alternative liquefied petroleum gas (LPG) supplies due to shortages arising from maintenance shutdowns at SA Petroleum Refineries.

About 60% of Hulamin’s energy requirements are met through LPG. The rest is powered by electricity.

Jacob said: “Rising input costs are always a challenge … are also healthy as they push us to run a lean and efficient manufacturing operation.”

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