Hulamin back to profits, but still no dividends

Pietermaritzburg-based aluminium semi-fabricator Hulamin is back in the black after two years of financial losses, reporting on Monday that the group has swung from an R81.5 million loss in 2020 to a R538 million profit for the year ended December 31, 2021.

However, the group is being cautious by opting not to declare a full-year dividend, due to uncertainty in the face of the Russia-Ukraine conflict. Hulamin last paid a dividend for its 2018 financial year.

The group’s strong turnaround in performance, after also being affected by the Covid-19 crunch in 2020 and its own internal restructuring and operation issues, comes on the back of stronger sales, higher aluminium product prices and tariff support from government through import duties on rolled aluminium products.

Results highlights:

• Group sales volumes increased 34% to 222 000 tons for the full year
• Revenue increased 52% to R13 billion
• Operating profit improved by 760% to R538 million
• Free cash flow from operating activities improved 166% to R239 million
• Basic earnings per share increased by 347% to 192 cents per share, and
• Basic normalised headline earnings per share came in at 82c, up 187% (compared to a loss of 94c a share for its restated 2020 results).

“Hulamin responded to the tough trading conditions of 2019 and 2020, returning to profitability in 2021. Contributors to this return to profitability include increased volumes, higher realised prices and growth in local sales,” said group CEO Richard Jacob.

“The higher Rand London Metal Exchange Aluminium price contributed measurably, further boosted by utilisation of assessed losses,” added Jacob.

He said that the group’s local sales grew by 54%, driven by the growth in beverage can consumption and the imposition of import duties on aluminium flat rolled products into South Africa by Itac (the International Trade Administration Commission).

Read: Loss-making Hulamin awards bosses R3.2m in share incentives

“Following the completion of its turnaround plans in 2020, Hulamin Extrusions performed well in 2021, generating profits for the year, which included the proceeds of the sale of the Olifantsfontein property,” noted Jacob.

Outlook

In terms of the new financial year, he said 2022 began with solid demand, firmer prices than in recent years and a reasonable rand/dollar exchange rate.

“Should these conditions continue, we expect the healthier trading conditions to persist, albeit without the metal price lag benefits experienced in 2021,” Jacob pointed out.

Hulamin’s share price closed almost 3% at the JSE close on Monday at R4.75.

The stock is up more than 84% over the last year, valuing the group at almost R1.5 billion. In 2019 when it embarked on job cuts (prior to the Covid-19 pandemic), the stock was trading at around R2.50 a share.

Read: Focus shifts to Hulamin as it hits losses, plans job cuts