Despite achieving record sales volumes of 233 000 t for the 2017 financial year, local aluminium supplier Hulamin's operating profit is expected to dip below that of the prior year, owing to the significantly stronger rand.
"The strengthening of the currency had a negative effect on profits, amounting to R300-million, and [a 68c impact on] headline earnings per share (HEPS) . . . for the year under review, as [the] conversion prices of Hulamin's rolled products are principally foreign denominated," the company explained in a trading statement issued on Tuesday.
However, an improving dollar aluminium price resulted in a positive metal price lag impact on Hulamin's profits of R150-million, an increase of R100-million over the gain in the prior year.
This metal price lag gain, together with the company's strong manufacturing and sales performance and the increased focus on cost reduction, provided a buffer against the negative impact of the currency, it added.
For the year ended December 31, Hulamin now expects to report around a 17% drop in earnings a share, to 100c apiece from the prior year's 120c apiece.
Its HEPS will show around 16% change, down to 100c apiece from the prior year's 119c apiece.