Hulamin to report biggest losses due to Covid-19

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Hulamin to report biggest losses due to Covid-19

Published Date: 2020-09-21 | Source: Stephen Gunnion | Author: Stephen Gunnion

Hulamin to report biggest losses due to Covid-19

The aluminium products manufacturer says local and export sales declined due to the pandemic, while its factories were also affected.

Hulamin will report wider losses for the first half of its financial year after the Covid-19 lockdown affected its manufacturing operations and impacted sales and exports.

In an updated trading statement, the aluminium products manufacturer said it would report a basic loss per share of 75c for the six months to end-June while its headline loss per share would widen to 70c. It would report a normalised headline less per share of 76c, down from restated headline earnings per share of 4c last year.

Earlier last week, the company said while it had implemented a number of measures to keep its operations running, manufacturing was still hampered during the lockdown. Sales volumes in its Hulamin Rolled Products division reduced by around 35% as exports declined by 23% and local sales fell 50%. The group exports as much as 65% of its rolled products, mostly to Europe and North America, which were similarly affected by the pandemic. However, it said some of the impact of the lower sales was mitigated by actions it took to reduce expenses last year, as well as further cost savings this year.

The sharp decline in sales volumes from April to June, combined with the rapid weakening of the rand and the dollar aluminium price over the same period, resulted in excess hedging instruments negatively impacting profit by 27c per share, as well as cash flows. Earnings after tax were further negatively impacted by the non-recognition and reversal of deferred tax assets amounting to 37c per share.

Meanwhile, its Hulamin Extrusions division experienced depressed sales volumes due to the negative impact of the lockdown on the local automotive, transport and engineering sectors, its main markets. This was mitigated by restructuring actions taken last year, which reduced the cost base of the business.

Due to the negative impact of Covid-19 on its operating performance and the associated build-up of working capital levels, net debt increased to R609 million at the end of June, with a net debt to equity ratio of 27%. Headroom in facilities amounted to approximately R500 million.

Hulamin's shares fell 8% to 92c in light trade on Friday. Its results are scheduled for release today.





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