HULAMIN LIMITED - Operational Update

            
HLM
Operational Update

HULAMIN LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1940/013924/06
JSE Code: HLM
ISIN: ZAE000096210
(?Hulamin?, the ?Group? or the ?Company?)

OPERATIONAL UPDATE


This announcement gives shareholders and other stakeholders an update on Hulamin?s operational
performance up to the end of Q4 2020, the current status of demand for Hulamin products,
confirmation that a 15% import duty on aluminium rolled products into South Africa has been
imposed, as well as a liquidity status update.

Performance continued to improve through October to December 2020 as markets stabilized
following Covid-19 disruptions. Hulamin Rolled Products sold almost 46 000 tons (185 000 tons
annualized). Both Hulamin Containers and Hulamin Extrusions performed better than expected and
contributed positively to overall Group performance.

In line with aluminium trade actions throughout the Western world (most notably in the USA and EU),
the South African government announced late in 2020 that a 15% import duty on rolled aluminium
products would be imposed from January 2021. With the major international markets now having
significant duty barriers (most notably the USA, EU and Japan), competition from low cost countries
has targeted unprotected markets such as South Africa. Following more than 24 months of
consultation with the full range of local stakeholders, the International Trade Administration
Commission (ITAC) has now ruled that Hulamin has faced significant hardship as a result of unfair
competition. It is noteworthy that importers will be able to continue to trade free of duty from
countries located within the four existing free trade agreements, including the EU and SADC.

In mid-September 2020, Hulamin reported its first half financial results performance. The table below
summarizes sales already reported as well as the continued improvement through Q3 and Q4:

                                                                       Group        Rolled Products
 Q1 Sales                                                              41 000                38 000
 Q1 Sales Annualized                                                  165 000               153 000
 Q2 Sales                                                              29 000                28 000
 Q2 Sales Annualized                                                  116 000               112 000
 Q3 Sales                                                              45 000                42 000
 Q3 Sales Annualized                                                  179 000               166 000
 Q4 Sales                                                              55 000                46 000
 Q4 Sales Annualized                                                  219 000               184 000
 Total 2020                                                           170 000               155 000


Order books in Hulamin Rolled Products and Hulamin Extrusions have continued to remain full through
Q4, while forecasts indicate demand remaining firm in the short term. Local demand for rolled
products has improved since the duty announcement in late December. Following the preliminary USA
Anti-Dumping outcome (which was relatively positive for Hulamin), demand in this market has
returned and prices are rising. Hulamin expects its position in USA common alloy markets to settle
from neutral to positive once equilibrium returns over the coming six to nine months.

Debt increased through 2020 following the slowdown in business activity, in spite of a significant
reduction in capital expenditure. Subsequently, rising activity levels have intensified pressure on
working capital. The sale of the Olifantsfontein property has been concluded and R55 million proceeds
received. Nevertheless, borrowing levels are forecast to remain elevated above the levels maintained
through 2018 and 2019, yet within facility limits, and with sufficient headroom. We remain in regular
communication with debt providers. We do not anticipate that any relaxation of covenants will be
required.

The information contained in this operational update has not been reviewed and reported on by the
Company?s external auditors.


Pietermaritzburg
3 February 2021


Sponsor
Questco Corporate Advisory Proprietary Limited

Date: 03-02-2021 12:12:00
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