Aluminium supplier Hulamin to cut 380 staff after first-half loss
Chief executive Richard Jacob said it was unfortunate that the company had to consider laying off some of its workforce, but Hulamin Extrusions suffered a first-half loss, which included a provision for restructuring costs.
“Sales volumes were lower following an equipment malfunction and the consequent disruption to production. We are making good progress in right-sizing the business to achieve a lower unit cost base; turning the losses around and releasing cash.
“We are taking action to improve profitability levels in the months ahead through cost reductions and actions to achieve higher sales volumes and prices. We estimate that around 180 employees in our Extrusion plant in Midrand and 200 employees in Pietermaritzburg will be affected by the right-sizing process,” Jacob said.
Hulamin’s expected job losses are still below those of reported by Tongaat Hulett when it announced in May that about 5000 workers were set to lose their jobs as the agriculture and property giant restructures its business.
In June, mining giant Sibanye-Stillwater said its cash-bleeding gold shafts would shed more than 3400 jobs as part of the restructuring of its gold operations in South Africa.
Hulamin’s expected job losses are not as big as compared to the other companies, but it will be a hammer blow as the country is struggling to create jobs in a sluggish economy.
Statistics South Africa reported that unemployment rate increased by 1.4percentage points to 29 percent in the second quarter of 2019.
In the six months to the end of June, Hulamin reported that its revenue declined by 1 percent to R5.25billion.
Headline earnings declined by 174percent to a loss of R73.2m after reporting a profit of R84.8m compared with last year, impacted by losses in Hulamin Extrusions, restructuring costs and a negative metal price lag.
Its basic loss per share was 23 cents a share, while basic headline loss a share amounted to 20c.
The group did not declare a dividend, as dividends are declared annually.
Jacob said Hulamin experienced challenging trading conditions during the first six months of 2019, as export sales to the US were disrupted by blockages in their distribution channel, customer overstocking and a softening underlying market.
“This disturbed the balance between material purchases and sales, resulting in an increase in work-in-progress and finished goods stocks, and the consequent absorption of cash. We have taken the required corrective actions and, as a result, working capital reduction has already become evident,” Jacob said.