“The firming rand will continue to impact financial performance negatively, as foreign-denominated selling prices translate to lower rand rolling margins,” the company said.
The financial markets have favoured the election of Cyril Ramaphosa as president of the ANC and South Africa, believing that it signals a new dawn for the economy and the country.
The rand has strengthened from an average of R14 against the dollar last year to R11.5934 by 5pm yesterday.
Hulamin said its headline earnings a share declined 13percent to 104cents, also because of the strong rand.
It said attributable earnings fell by 14percent to R332million for the year.
Cash flow was R296m and the dividend of 15cents a share was maintained.
In terms of operations, Hulamin posted record production and sales in rolled products of 215000 tons. It said improved demand for beverage can products helped the rolled products division to grow its local sales by 22percent.
Hulamin chief executive Richard Jacob said: “We report another year of record sales and improved manufacturing performance following the previous record set in 2016, against a backdrop of continuing tough market conditions and a stronger rand.
“This was achieved through an ongoing focus on manufacturing excellence, with a specific emphasis on cost reduction and tight capital discipline. This resulted in a second consecutive year of strong cash flows and a further reduction in borrowings.”
The performance of Hulamin’s extrusions division was disappointing, the company said.
“During 2016, we approved a capital investment plan for the extrusions division and the repositioning of the business in the very dynamic local market.”
The company said that trade actions between the US and China were creating positive demand momentum for Hulamin products in the US.
Hulamin had benefited from the R150million price lag in the year under review, compared with R50m in 2016.
The aluminium price averaged $1968 (R22685) a ton from $1604 a ton in 2016 and closed at $2242 a ton at the end of the year, compared with $1713 at the end of 2016.
Hulamin warned that the proposed aluminium trade restriction recommendations issued by the US on February 16 may impose value and volume constraints on aluminium imports into the US.
Hulamin shares closed 3.92percent lower on the JSE yesterday at R4.90.
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- BUSINESS REPORT ONLINE