Hulamin swings to full-year profit

Aluminium manufacturer Hulamin has experienced a significant turnaround, swinging to profit in the 2021 financial year. The company credits this success to various factors such as increased volumes, higher metal prices, and growth in local sales. Richard Jacob, the CEO of Hulamin, recently joined CNBC Africa to discuss the company's latest results and shed light on the strategies that have propelled them forward. In the interview, Jacob reflected on the challenges and triumphs of the past year, outlining key factors that have contributed to the company's resurgence. He highlighted the impact of the COVID-19 crisis, government support, operational disruptions, and market dynamics on Hulamin's performance. Despite facing obstacles like plant maintenance shutdowns, COVID waves, regional unrest, and cyber attacks, the company witnessed a steady improvement in business momentum throughout the year, culminating in a strong fourth quarter. The CEO emphasized the critical role of volume growth in the rolling business, which significantly boosted profitability for Hulamin. Jacob also discussed the unique market conditions that played to the company's advantage, particularly the shortage of glass that benefited the local beverage can sector. He noted the strong demand for aluminium cans in South Africa, driven by shifts away from single-use plastics and the popularity of beverages like beer and carbonated soft drinks. While acknowledging that the exceptional 109 percent growth in domestic volume may not be sustainable, Jacob expressed confidence in the robust demand for aluminium cans and the company's commitment to meeting market needs. Another key driver of Hulamin's success has been the surge in aluminium prices, driven by a global supply shortage. Jacob provided insights into the factors affecting the aluminium market and shared his outlook on pricing trends. Despite the positive impact on profits, he highlighted the challenges posed by increased cash requirements and working capital pressures due to rising aluminium prices. Looking ahead, Jacob outlined Hulamin's growth strategies for the upcoming year, focusing on optimization, investment in product lines, and capacity expansion. He emphasized the importance of consolidating the company's improved performance in 2021 and building a strong foundation for future growth. Addressing the topic of dividends, Jacob explained the decision to withhold dividends in light of cash flow constraints caused by high aluminium prices. He underscored the company's commitment to prioritizing dividend payments once cash flow conditions improve, highlighting the importance of maintaining a healthy balance sheet while rewarding shareholders.