Hulamin (HLM) H1 2024 earnings summary

Executive summary

• Turnover declined 6% to R7.0 billion for H1 2024, mainly due to lower volumes and export pricing pressure, but local market sales grew 77% year-on-year, now comprising 54-55% of total sales, driven by can body demand and a customer-centric strategy.

• Strategic capital investment increased 114% to R302 million, focused on wide can body readiness, plant reliability, and growth markets.

• Export demand recovered in late H1 2024 but was temporarily set back by a fire in the Coil Coating Line, with repairs on track for mid-September resumption.

• Simplification strategy led to discontinuation of low-margin products, improving product mix but reducing volumes.

• Strong local demand, especially in cans (67% of local sales), offset by continued export pressure and operational challenges in extrusions.

Financial highlights

• Normalised EBIT fell 27% to R265 million year-on-year, but improved sequentially from H2 2023.

• Normalised EBITDA declined 19% to R343 million year-on-year; margin at 4.9% (down from 5.7% in H1 2023).

• Group revenue down 6% year-on-year to R6,967 million, but up 9% sequentially from H2 2023.

• Net debt at R1,377 million, with debt to equity at 38.3%, up from 28.1% year-on-year, due to inventory build and capital investment.

• Headline earnings per share dropped 17% to 79c; normalised HEPS down 38% to 43c.

Outlook and guidance

• Local market conditions expected to remain resilient for the rest of 2024; export demand has recovered.

• Export can end and tab production to resume mid-September after Coil Coating Line repairs.

• Focus on reducing inventory to 44,000 tons by year-end to release cash flows and improve conversions.

• Net debt reduction, working capital optimization, and cost control remain top priorities.

• Management expects agility in H2 2024, focusing on high-margin products and cost containment.