JSE-listed Hulamin’s turnover for the financial year ended December 31, increased by 22% year-on-year to R16-billion, on the back of group sales volumes of 211 328 t, compared to R13-billion in 2021.  

Normalised earnings before interest, taxes, depreciation and amortisation increased by 339% year-on-year to R667-million.

No dividend was declared in respect of the current period or the comparative period.

“The improved trading results experienced in the first half of 2022 continued into the second half. The focus in the second half has been to improve the product sales mix and capitalise on the continued structural growth in demand for aluminium beverage cans.

“This saw local sales volumes increase by 7% to 94 651 t. Pricing was increased to offset commodity pricing and inflation. This, together with a weaker exchange rate and a stable cost base, saw normalised headline earnings per share increase by 28% to 105c,” comments interim CEO Geoff Watson.

He adds that the new financial year has started with solid customer demand, particularly in the local and export beverage can markets, stable product margins and a weaker exchange rate. Hulamin is also said to be benefitting from a more stable plant performance.

Therefore, 2023 has started off positively, Watson highlights.

For 2022, local beverage can sales grew by 14% year-on-year to 7 045 t as aluminium packaging continued to increase its share of the total beverage packaging market.

Hulamin notes that contracted prices for can stock firmed as can makers globally looked to secure raw material supply. This resulted in higher sales volumes from the sale of beverage can material and improved margins over the comparable period.

These product streams also support increased scrap consumption with consequential benefits for margins, Hulamin notes.

It says that tight cost management has dampened the impact of commodity and energy inflation, resulting in a stable cost base. The exchange rate weakened by 11% and this aided performance.

The outcome was that normalised earnings before interest and taxes improved to R565-million.

The net interest charge increased by 40% to R91-million owing to higher market interest rates and increased average debt levels during the year, driven predominantly by the higher average rand aluminium price.

The taxation charge increased considerably to R140-million as the company benefited to the tune of R115-million in 2021 from the one-off raising of a deferred tax asset.

The result is that normalised headline earnings a share increased by 28% to 105c.

In the second half of the year, the group generated positive net free cash flows of R387-million, reducing net borrowings to R836-million as at December 31.

Watson says that, in the Extrusions business, sales were 8% lower owing to weakness in the market as a result of loadshedding, floods and an automotive model change.

OUTLOOK

Watson says that, for this year, the market remains unconstrained.

He adds that simplification of the business is under way.

Watson notes that capital and continuous improvement projects have started to further ramp up aluminium can product volumes by 10% and scrap consumption by 15%.

Pricing is said to be in place for the full year to accommodate commodity price increases.

Engineering has started on a project to increase scrap consumption by over 20 000 t, with commissioning in 2024.

Environmental, social and governance projects totalling R150-million over three years have been identified and further discussions are under way, Watson informs.

Watson says that the group had to invest considerably in generator capacity, to give protection against load curtailment as a result of loadshedding, especially during level six.

While this has allowed for minimum disruptions, it has added to the costs, he notes.