HULAMIN LIMITED - Chairmans Statement at the Annual General Meeting of Shareholders

Chairman’s Statement at the Annual General Meeting of Shareholders

HULAMIN LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1940/013924/06
JSE Code: HLM
ISIN: ZAE000096210
(“Hulamin” or “the Company”)

CHAIRMAN’S STATEMENT AT THE ANNUAL GENERAL MEETING OF SHAREHOLDERS

Following operational disruptions in 2019 and 2020, Hulamin developed and implemented a
turnaround plan to return to profitability and strong cash flows. In Hulamin Rolled Products, the
turnaround plan began in mid-2019 with cost reduction, the opening up of distribution channels into
the USA as well as a release of working capital, whilst Hulamin Extrusions’ turnaround plans focused
on consolidation, overall and unit cost reduction and efficiency improvement. These immediate
improvement programmes were disrupted by lockdowns arising from the Covid-19 pandemic.
Controls implemented to limit the pandemic’s spread severely disrupted both sales and
manufacturing operations.

Since the first lockdown regulations were introduced in the first half of 2020, Hulamin has put
measures in place to protect employees while operational improvements have continued in the
current year:
    • Annualised group sales year to date (April) amount to approx. 200 000 tons, with sales from
        Hulamin Rolled Products totalling 189 000 tons annualised.
    • Sales were curtailed in April in line with planned volumes, as a result of an equipment upgrade
        and maintenance shutdown successfully completed. All equipment has since returned
        successfully to full operation, as planned. The Camps Drift Hot Finishing Mill ran five days over
        its planned start up after parts ordered from Germany arrived out of specified dimension.
    • Planned improvements have been achieved, resulting in the plant running at higher levels of
        throughput.

Following the announcement of the imposition of local import duties on aluminium rolled products
late in 2020, we have seen a measurable increase in local demand. This has been compounded by
increased demand for beverage cans and is in line with a trend emerging globally, where beverage
fillers (brewers and soft drink manufacturers) and consumers are showing strong preferences for
aluminium beverage cans. This has compounded Covid-related shortages in supply, resulting in surging
demand, in excess of available capacity. Hulamin is working hard to meet the demands of its
customers, having already contracted its capacity prior to the announcement of the local import
duties.

Global demand has exceeded supply across most markets. We are seeing a lengthening of lead times
across the globe, particularly in beverage can markets. In Europe and the USA, trade barriers have
recently been strengthened. Many rolling mills (large segments of capacity) have therefore been
excluded from these markets. Demand from Hulamin Rolled Products customers therefore remains
firm.

External drivers continue to impact the business. The Rand has strengthened in 2021 to remain below
R14.00 per US Dollar, which negatively impacts profitability. The LME Aluminium price has risen from
approx. $1800 per ton at year-end to around $2500 per ton currently. Although this results in a
positive metal price lag, the resulting increase in working capital has increased borrowings.
Hulamin Extrusions has continued to perform well in 2021 following the successful implementation of
turnaround actions in 2019 and 2020. Its return to profitability and positive cash flow has been further
enhanced with the sale of the Olifantsfontein property that was concluded early in January.

Both Hulamin Rolled Products and Extrusions are returning to full volume. The Rand-US Dollar
exchange rate has strengthened measurably, in line with the weakening of the US Dollar. This will
likely be the key driver of profits in the balance of the year ahead. The focus on operational
improvements remains, with a keen focus on inventory and working capital.

Any forward-looking information contained in this announcement has not been reviewed or reported
on by the Company´s external auditors.


Pietermaritzburg
27 May 2021

Sponsor
Questco Corporate Advisory Proprietary Limited

Date: 27-05-2021 04:25:00
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