Ban on alcohol sales blamed on poor performance
Hulamin faced strong headwinds during 2020. Local and export sales were impacted by Covid-19 related slowdowns across the local and global economies. Lockdown in South Africa and across the globe impacted sales of all products and resulted in the inability to operate until Hulamin Rolled Products was issued an “essential services” certificate in mid-April.
The lockdown-driven ban on alcohol sales in the local market further impaired sales of beverage can material in its largest market, South Africa.
Following the partial lifting of lockdown restrictions during the second half of 2020, all operations returned to operating profitability in the final quarter as volumes improved.
Hulamin Extrusions completed its turnaround plans. Following the closure of its Oliefantsfontein site, which has subsequently been sold, the business has consolidated operations successfully in Pietermaritzburg and returned to profitability in the second half.
Order books are more healthy again. Demand for beverage can products is particularly firm. Both Hulamin Rolled Products and Hulamin Extrusions are therefore focused on returning to full manufacturing volumes, although Hulamin Rolled Products will undertake a comprehensive maintenance shutdown during the first half of 2021.
Sales volumes, together with the level of the Rand against the US Dollar will play a key role in determining 2021 performance.
RESULTS HEADLINES
- Group sales volumes decreased by 24% to 166 000 tons
- Headline losses down 12% to a loss of R211 million impacted by restructuring costs, a positive metal price lag, R114m excess hedges and a reduction in restructuring costs
- Normalised EBITDA (1) down 128% to a loss of R89 million
- R485 million free cash outflow (from R222 million inflow in 2019) on higher Rand Aluminium price and lower capital expenditure
- Balance sheet remains resilient, although debt/equity declined to 35% (2019: 11%)
- Turnaround actions ongoing
