Hulamin suffers impairment charge of R1.3bn and loss of R240m
The group said the decline in earnings was a result of restructuring costs, a negative price lag and Isizinda restructuring, and a once-off restructuring costs of R114m were incurred during the period.
Hulamin admitted that it experienced difficult trading conditions during 2019 as sales of rolled and extruded products experienced weaker demand in both local and international markets. “Overall, volumes were 11percent down to 219000 tons, with Hulamin Rolled Products 10percent lower and Hulamin Extrusions fell by 16 percent,” the group said.
In response to the difficult trading conditions the group implemented a turnaround strategy from August that resulted in the shedding of around 250 jobs and the closure of the Olifantsfontein site and marketing it for sale in 2020, focused actions to restore volumes to both Hulamin Rolled products and Hulamin Extrusions, strict working capital management, as well as other cost reduction initiatives.
Chief executive Richard Jacob said the year was a difficult one for the group as its export sales to the US were disrupted by blockages in its distribution channel, the global economy slowed measurably through the year while local regional demand came under severe pressure.
“Following the absorption of working capital in the first half of 2019, we paid specific attention to managing borrowings, to end the year 23percent lower than in 2018 at R226m, and this represents a positive cash flow of R68m during 2019,” Jacob said.
The group said the turnaround plan undertaken during the second part of the year had been completed and it has resulted in the group saving R250m in its Rolled Products and a further R150m in Hulamin Extrusions.
Hulamin also managed to reduce its debt by R324m between July and December. Its revenue declined by 7percent to R10.7bn and the group said the currency, which affects both profits and cash flows, weakened during the year from the R13.25 average in 2018 to R14.45 in 2019.
Its loss-a-share increased by 57percent to 380 cents a share and headline loss-a-share was 76c compared to headline earnings a share 91c reported last year. The group did not declare a dividend.
Looking ahead, Jacob said the outbreak of the Covid-19 pandemic in late 2019 and early 2020 had had a serious impact on all Hulamin’s markets.
“It is likely to reduce sales volumes considerably and counteract the benefits of cost saving actioned in 2019 as well as the weaker rand/dollar exchange rate,” he said.
Hulamin shares closed 4.07percent lower at R1.18 on the JSE on Friday.