Hulamin FY HEPS drops 11%

Shares of Hulamin took a hit following the release of its annual results, with a temporary drop of over 9 percent. The stock has since recovered slightly, currently sitting at a 2 percent loss. Despite reporting double-digit losses in revenue and profits, Hulamin experienced a significant increase in cash flow, soaring over 500 percent. To further delve into the numbers and the company's performance, CNBC Africa sat down with Mark Gounder, the CEO of Hulamin. Gounder acknowledged the challenges faced by the company, attributing them to the global recession and the softening of the global aluminum market. He emphasized the importance of focusing on cash flow, noting that businesses remain operational not solely due to profits but because of adequate cash reserves. Hulamin anticipated market challenges in the second half of the year, leading to a drop in future sales and a decline in both sales volume and turnover. Gounder highlighted a strategic shift towards higher-margin items, which helped in stabilizing the company's full-year profit despite external factors. One of the key areas that Hulamin has been focusing on is the production of aluminum beverage cans. As the world increasingly moves away from plastic due to environmental concerns, aluminum cans present a recyclable and sustainable alternative. Gounder pointed out that besides the environmental benefits, the shift to aluminum cans has improved margins by lowering production costs, aiding in mitigating the impact of reduced volumes. While global demand in key export markets remains uncertain, Hulamin has been strategically bolstering its presence in the local market. The company's focus on the can stream and investment in local production capabilities aims to reduce reliance on imports and enhance its market share. Despite challenges with logistics and port inefficiencies impacting exports, collaborations with port authorities and local government have shown improvements, offering a positive outlook for Hulamin's export operations. Looking ahead, Gounder shed light on the sustainability of the company's cash flow growth and the potential resumption of dividends for shareholders. He expressed confidence in Hulamin's simplification strategy, emphasizing the control of metal flow and inventory as essential elements for future growth. The CEO outlined plans for expansion capital funded by free cash flow and highlighted investments in employee upskilling to prepare for future market dynamics. Gounder hinted at the possibility of resuming dividends post the completion of major expansion projects, expected by the third quarter of the following year. The company aims to create and deliver value to its loyal shareholders while maintaining a strategic focus on working capital and cash management. With a positive outlook on the growing local market and improved operational efficiencies, Hulamin is positioning itself for sustainable growth and shareholder returns.