Johannesburg - Aluminium producer Hulamin reported yesterday that net profit leapt roughly 100 percent for the six months to end June, boosted by a weaker rand and improved production.
Net profit increased to R152 million up from the R76m in the corresponding period a year ago.
The company said group sales volumes rose 19 percent to 110 649 tons.
Rolled products sales rose 21 percent to 205 000 tons annualised.
Local inflation
Richard Jacob, the chief executive of Hulamin, said: “The improved manufacturing performance in Hulamin rolled products together with a weaker rand on average against the US dollar during the six months under review, mitigated the effects of continued weak global and local market conditions, local inflation and softer rolling margins.”
Turnover increased to R4.9 billion, from R3.9bn, while headline earnings per share were up by 92 percent to 48c.
Jacob said the absence of power outages during this reporting period was positive for the company.
In February’s annual results, the company said energy supply was inconsistent early in the year, with disruptions to electricity and gas supplies impacting negatively on manufacturing output.
“The supply has been very positive from Eskom in this period as we didn’t experience any load shedding.
“We hope it will remain the same throughout as electricity supply is very important for our business,” it said.
The company said market conditions in South Africa, and major export markets, remained subdued and oversupplied in the first six months of this year resulting in selling prices, or rolling margins, remaining under pressure.
But Hulamin expected the momentum gained from improved manufacturing performance in the first half of this year to continue in the second half, though weak market conditions were expected to persist both locally and internationally.
Hulamin’s shares decreased 2 percent yesterday to R5.88, after it did not declare a dividend in the reporting period.
However, it said the board was committed to the company’s dividend policy of three-time cover in the context of appropriate financial and market conditions and was evaluating conditions for the full year.
“We are expecting to have positive outcomes with our employees once we start wage negotiations with our employees,” Jacob said.
Percy Takunda, an analyst at Momentum SP Reid Securities, said: “The sector is not necessarily shooting the lights, but volumes did grow by 19 percent and a weaker rand helped the numbers as well.
“The costs were also within inflation.
“The sector is a low margin business so any material movement on the top line has a big impact on the bottom line number,” he said.
BUSINESS REPORT