Following operational disruptions in 2019 and 2020, Hulamin developed and implemented a turnaround plan to return to profitability and strong cash flows.
In Hulamin Rolled Products, the turnaround plan began in mid-2019 with cost reduction, the opening up of distribution channels into the USA as well as a release of working capital, whilst Hulamin Extrusions’ turnaround plans focused on consolidation, overall and unit cost reduction and efficiency improvement.
These immediate improvement programmes were disrupted by lockdowns arising from the Covid-19 pandemic. Controls implemented to limit the pandemic’s spread severely disrupted both sales and manufacturing operations.
Since the first lockdown, Hulamin has put measures in place to protect employees while operational improvements have continued in the current year:
- Annualised group sales year to date (April) amount to approx. 200 000 tons, with sales from Hulamin Rolled Products totalling 189 000 tons annualised.
- Sales were curtailed in April in line with planned volumes, as a result of an equipment upgrade and maintenance shutdown successfully completed. All equipment has since returned successfully to full operation, as planned. The Camps Drift Hot Finishing Mill ran five days over its planned start up after parts ordered from Germany arrived out of specified dimension.
- Planned improvements have been achieved, resulting in the plant running at higher levels of throughput.
Global demand has exceeded supply across most markets. Hulamin is seeing a lengthening of lead times across the globe, particularly in beverage can markets. In Europe and the USA, trade barriers have recently been strengthened. Many rolling mills (large segments of capacity) have therefore been excluded from these markets. Demand from Hulamin Rolled Products customers therefore remains firm.
The LME Aluminium price has risen from approx. $1800 per ton at year-end to around $2500 per ton currently. Although this results in a positive metal price lag, the resulting increase in working capital has increased borrowings.
Hulamin Extrusions has continued to perform well in 2021 following the successful implementation of turnaround actions in 2019 and 2020. Its return to profitability and positive cash flow has been further enhanced with the sale of the Olifantsfontein property that was concluded early in January.
Both Hulamin Rolled Products and Extrusions are returning to full volume. The Rand-US Dollar exchange rate has strengthened measurably, in line with the weakening of the US Dollar. This will likely be the key driver of profits in the balance of the year ahead. The focus on operational improvements remains, with a keen focus on inventory and working capital.