Aluminium group Hulamin expects its headline earnings for the year to end-December to be at least a quarter lower than the previous year as the group struggles to recover from a factory fire in June.
Hulamin’s share price fell by more than 10% on Tuesday after the group issued a trading statement warning investors of the slump in annual earnings.
According to the statement, headline earnings per share (HEPS) are expected to come in at 60-67c, down 24%-32% year on year.
Hulamin buys primary aluminium and supplies a range of high-value, niche rolled products and complex extrusions, with aluminium rolling.
The group said its latest financial year began on a promising note, highlighting improved market conditions in its export segments and growing demand.
However, a fire at the can end finishing line “limited the business’s ability to fully seize opportunities”, forcing the group to direct its available capacity towards lower margin products.
This resulted in a weaker sales mix in the second half, with the finishing line being repaired within three months of the fire. An insurance claim finalised after the fire caused the group to report a net gain from asset replacement insurance proceeds of R48.7m.
Operational challenges resulted in rolled products volumes rising by only 2% year on year. The company is implementing a strategic review of its extrusions division after it performed below expectations.
Normalised headline earnings per share, which account for metal prices and restructuring costs, are expected to drop 43%-48%, reflecting the effect of weaker prices during the period under review.
The group plans to publish its annual financial statements on March 17.
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