DURBAN – Listed aluminium supplier and exporter Hulamin said yesterday that it remained confident of a return to profitability in the second half after its losses widened during the six months to the end of June on Covid-19.
The group reported that its losses grew to R230.6million from R154m the prior year as the pandemic hit its operations.
Chief executive Richard Jacob said the group went through significant cost-reduction efforts, coupled with stringent controls over working capital, which helped to cushion the impact of Covid-19.
Jacob said it managed to claw back some of the losses.
“As experienced by most companies globally, the emergence of the coronavirus pandemic resulted in major disruptions to demand, as well as our manufacturing operations. Consequently, the first half of 2020 was a particular challenging trading period,” Jacob said.
Hulamin said the stringent lockdown regulations in South Africa and the economic depression between April and June resulted in disruptions to all manufacturing operations.
The group said the ban on alcohol sales also weighed heavily on the local beverage can market.
It said group sales plummeted 35percent to 71000 tons from 109000 tons, while Hulamin Rolled Products fell 34percent to an annualised 134000 tons from 206000 tons a year earlier.
Hulamin said the decline in volumes led to a 30percent decline in revenue to R3.7billion.
It said it had been able to restart manufacturing of certain essential goods product lines during April.
“These essential goods product lines, which excluded material for alcoholic beverages, represented less than 50percent of Hulamin’s product portfolio,” Hulamin said.
“As a result, sales volumes in the second quarter were the lowest in recent history.”
Hulamin said its headline loss a share also accelerated 52.2percent to 70cents a share and loss a share widened by 53.1percent to 75c.
The group did not declare a dividend.
Jacob said the group’s 2019 strategy to contain costs would support its turnaround in the second half.
He said Hulamin was already experiencing green shoots from the strategy.
“The business suffered a first-half loss, which includes costs related to the closure of the Olifantsfontein plant that have carried over into 2020.
“With the right-sizing of the business to one with a lower unit cost base, consolidated in Pietermaritzburg, largely complete, we are looking forward to a return to profitability in the second half of 2020,” he said.
Hulamin shares rose 2.17percent on the JSE yesterday to close at R0.94.