JSE-listed aluminium products company Hulamin has reported that it delivered a strong operational recovery for the six months ended June 30.

Following the resolution of the majority of the operational challenges experienced in the second half of 2025, the company noted that its core operations have stabilised and are ramping towards the upgraded plant's design run-rate.

The company said the successful commercialisation of its wide-canbody expansion across its customer base, together with the continued execution of its portfolio optimisation strategy through the disposal of noncore businesses, positioned the group well for the future.

Proceeds from these disposals will be applied to reduce debt and further strengthen the balance sheet.

While first-half earnings remained below the comparative period, the company said the substantial improvement in operational performance from second half of 2025 provided a solid foundation for improved financial performance in the periods ahead.

“The first half of 2026 marked a significant turning point for Hulamin as the group delivered a strong operational recovery,” said Hulamin CEO Mark Gounder during a results presentation on August 3.

Following the commissioning and quality challenges experienced associated with the can stream in the second half of 2025, the group said it had delivered a material improvement in operational performance, representing an important milestone in the execution of its growth strategy.

Hulamin said the operational recovery was underpinned by a structured restructuring programme encompassing management leadership changes and the appointment of specialist manufacturing expertise to strengthen plant reliability, operational efficiency and product quality.

As a result, the company said the majority of the operational constraints experienced in the prior period had been resolved, with the group's core manufacturing streams continuing to ramp towards the upgraded plant's design run-rate.

While rolled products volumes remained below the comparative period, operational performance improved progressively throughout the first half of this year.

The successful commercialisation of the wide-canbody volumes across customers, together with continued strength in strategic product categories and strong demand across key growth markets, positions the group to translate this operational recovery into an improved financial performance in the second half of this year.

Hulamin said the board remained confident that the company was well positioned to realise the benefits of the significant expansion and growth capital invested over recent years.

FINANCIAL RESULTS

During the presentation, Hulamin CFO Pravashni Nirghin explained that Hulamin's financial performance remained highly sensitive to the movements in the aluminium price and the rand:dollar exchange rate.

During the first half of this year, she said, both variables were unusually volatile, influenced by geopolitical uncertainty and a tightening global aluminium market, adding that the aluminium price increased by more than 30% compared with the prior period, and moved above $3 000/t.

Nirghin said this supported earnings through a favourable metal price lag contribution of more than R300-million.

At the same time, the higher metal price materially increased the funding required for inventory and, therefore, placed pressure on networking capital.

The rand strengthened by about R1.98 against the dollar year-on-year. This reduced rand denominated margins and adversely affected earnings by more than R150-million, she said.

Nirghin added that the group currently had no London Metals Exchange (LME) hedging in place, as the programme remained suspended.

She said foreign exchange exposure was, however, partially managed through rolling margin hedges.

“As we continue to monitor net debt and liquidity, we will also continue to monitor market conditions and the appropriateness of reintroducing LME hedging.

“Despite an LME increase of roughly $1 000/t from June 2025 levels to the 2026 peak, the increase in net debt was limited. This reflects the benefit of stronger operating cash generation, tighter working capital management, and disciplined use of available facilities.”

Hulamin has reported that group revenue for continuing operations for the period of R7.24-billion was higher than the R7.1-billion reported for the first half of the previous year, despite lower sales volumes.

Nirghin explained during the presentation that the increase was primarily driven by higher LME aluminium prices, stronger geographic premiums, particularly during the first quarter of the year, an improved product mix and the initial commercial returns from the wide-canbody project.

The company reported a year-on-year decrease in normalised trading profit for continuing operations of R102-million for the first half of this year, compared with R215-million last year.

This was driven primarily by the stronger rand and the carryover impact of the operational constraints from the second half of 2025 into the first quarter of this year, particularly in the canned products stream.

Group earnings before interest, taxes, depreciation and amortisation (Ebitda) for the period were R470-million, up 103% year-on-year, benefiting significantly from the favourable metal price lag arising from the rising aluminium prices.

Cash generated from operating activities increased year-on-year to R69-million.

Additionally, net debt increased by 7% year-on-year to R1.7-billion.

Basic earnings per share for continuing operations increased year-on-year to 79c a share, while basic headline earnings a share for continuing operations also increased to 79c a share, compared with 14c a share in the first half of last year.

No dividend was declared in respect of the current period or the comparative period.

NONCORE DISPOSALS

Hulamin reported that the disposal of Hulamin Extrusions became effective on July 1 following fulfilment of all remaining conditions precedent. The transaction was largely complete.

The company noted that cash proceeds of R10-million had been received, with an up to R100-million consignment stock agreement now in effect. The remaining disposal proceeds were expected to be realised during the second half of the year.

Additionally, the company noted that the sale of Hulamin Containers' operating assets is complete.

The proceeds for the equipment had been received, while the land and buildings were currently in the process of being transferred. Upon completion, the company noted, the balance of the disposal proceeds would be received.

All disposal proceeds will be applied to reduce the group's net debt, strengthening the balance sheet and improving free cash flow generation into the second half of this year and beyond.

MARKET CONDITIONS

During the presentation, Gounder explained that Hulamin remained largely market unconstrained despite geopolitical landscape challenges and changes, noting, however, that these developments had resulted in a review and responses to the company’s business model and overall strategy in order to remain well positioned to capitalise on global demand.

“Our strategy is to seize emerging opportunities in both the local and export market,” he said.

On the local front, he said the company was currently at 56% of total volumes and on track with its strategic objective of 60%. He explained that canbody demand remained strong, with Hulamin well positioned to displace wide canbody imports as the company had fully commercialised its investment.

He added that can-end is under import pricing pressure as a result of cheap finished ends being imported from Asia, noting that Hulamin is currently working with its customers to support application for local industry safeguards, with lost volumes being repositioned to North America.

Gounder said local standards represented an incremental opportunity pending working capital and route to market improvements.

In North America, he noted, plate demand remained resilient despite Section 232 tariffs, with market prices absorbing tariffs. Additionally, he said growing US can-end demand enabled repositioning of displaced local volumes, while excess hot mill capacity was being optimised through spot hot band sales.

Meanwhile, Gounder noted that expanded routes to market in Europe for plate were showing positive results, while Hulamin's chrome-free production was key in increasing the compliance-driven export market.

“Notably, on the export market, our focus is on high-margin and niche product streams and segments.”