JSE-listed aluminium producer Hulamin has reported a much-improved 2024 financial year in terms of market conditions, particularly in the company’s export segments.

“Demand recovery brought renewed opportunities, although pricing pressures in certain streams, such as export can stock and standards, persisted.

“Locally, demand remains robust, with strong demand for can body products in particular,” says Hulamin CEO Mark Gounder.

The company is a major supplier of aluminium coil for the manufacturing of beverage cans, holding 60% of the can-body stock market locally. The company is also actively involved in recycling aluminium, including used beverage cans.

Hulamin operates through its Rolled Products and Extrusions divisions, with manufacturing facilities in Pietermaritzburg, KwaZulu-Natal, and Midrand, Gauteng. 

In the year ended December 31, 2024, Hulamin managed to recover demand following operational challenges and a fire incident at its can-end finishing line.

The Coil Coating Line 2 fire impacted 8 000 t of higher margin export can-end and -tab products.

The group’s sales volumes totalled 173 167 t in the reporting year, generating normalised earnings before interest, taxes, depreciation and amortisation (Ebitda) of R344-million. This compares with the normalised Ebitda of R486-million reported in the prior year.

In the year under review, demand recovery in Rolled Products resulted in volumes growing by 2% to 173 167 t, which was offset by operational challenges.

The company reported an improved sales mix, having sold 55% of its volumes locally with record can body and plate volumes having been supplied domestically.

The company sold 51 587 t of can body products to the local market in the reporting year, compared with 38 274 t in the prior year, while plate sales totalled 31 040 t, against the prior year’s 24 393 t.

Despite the improved sales mix and volume growth, operational challenges including a fire incident resulted in Hulamin’s normalised operating profit decreasing by 22% year-on-year to R378-million, from normalised operating profit of R532-million having been reported in the prior financial year.

Net profit attributable to shareholders of R246-million in the year under review compares with an attributable net profit of R271-million in the prior year.

Basic headline earnings per share (HEPS) decreased by 28% year-on-year to 64c, compared with HEPS of 88c in the prior year.  

The basic normalised headline profit per share was 45% lower year-on-year at 42c, compared with 77c in the prior year.

Hulamin defines normalised HEPS as headline earnings excluding metal price lag and non-trading expense or income items which, owing to their irregular occurrence, are removed to more closely present earnings attributable to the ongoing activities of the group.

The group did not declare a dividend for 2024.

Further, Gounder says export pricing pressure persisted in the EU for cold rolled standards and plate products in the year under review. He foresees persistent long-term market risks in this region owing to protectionism emerging trends.

Net debt was R1.3-billion as at December 31, which CFO Pravashni Nirghin expects to increase in the next financial year. “Our strategy remains unchanged, with liquidity being a critical focus for 2025.”

The group’s net debt-to-equity ratio widened to 35.6% in the year under review, compared with a ratio of 24.5% in the prior year.

Gounder confirms that the company has completed a comprehensive fire and asset risk assessment to mitigate against future incidents and rebuilt the Coil Coating Line 2 on time and on budget.

The company has also launched a strategic review of the Extrusions division following poor performances in recent years.

GROWTH STRATEGY

The company has been investing in wide can-body manufacturing to offset the 23 000 t/y of wide can-body products imported into South Africa.

Capital expenditure in the year under review amounted to R569-million.

Completion of the widebody investment will allow Hulamin to increase market share by displacing imports.

The group is adding a 15 000 t widebody can line in South Africa, with seven of nine can lines in the country now being designed to use wide-width can-body coils to maximise efficiencies.

Hulamin has completed the first two phases of a three-phased approach to the wide can-body expansion project.

Gounder confirms that the company aims to complete the third and final phase of the project during July, which will pave the way for the start commercial-scale wide can-body production by the end of the fourth quarter, which will then ramp up in the following months.

The local market remains a top priority for Hulamin, while protecting its can stream and increasing scrap use further from the current 22% rate.