Hulamin Limited Interim Results Presentation

Transcription

1 Hulamin Limited Interim Results Presentation For the half-year ended 30 June 2009

2 Abnormal Market Conditions Sharpest fall in global consumption of aluminium since 1975 oil shock Rolled products and extrusions in USA and EU Automotive 20-30% Transport 40-55% Building and Construction 15-40% Short lead times and support for domestic producers Aluminium price down 50% Losses, closures and retrenchments among global aluminium semi-fabricators Currency volatility 2

3 Salient Features Order intake recovering after sharp reduction Operating profit reduced from R270 million to R114 million HEPS reduced from 84 cents to 12 cents per share Positive cash flow of R374 million Rolled Products margins improved in difficult market conditions No interim dividend Hulamin Engineering Solutions sold effective 30th June 3

4 Income Statement R'million Half year ended: Average exchange rate Revenue Operating profit Finance costs Profit before tax Tax Net profit Basic headline earnings per share (cents) Normalized headline earnings per share (cents) Dividend per share (cents) 30 June (74) 40 (15) (1) - 30 June (43) 227 (41)

5 Operating Profit R millions H1 Annualised Ave R/$

6 Balance Sheet R'million Non-current assets Current assets Inventories Trade and other receivables Net derivatives and held for sale TOTAL ASSETS (excl cash) 30 June June Total Equity Total net borrowings Deferred income tax liabilities Retirement benefit obligations Current liabilities TOTAL EQUITY AND LIABILITIES Net debt to equity % % 6

7 Cash Flow R'million Half year ended: EBITDA Changes in working capital Inventories Debtors Creditors Changes in derivatives Tax payments Non-cash and other items Cash flow from operations Capital expenditure normal and start-up costs project Cash flow before interest and dividends Interest Dividends Net cash flow 30 June (203) (75) (48) (82) 726 (106) (117) 503 (100) (29) June (549) (410) (370) (96) 21 (259) (73) (210) (542) (69) (66) (677) 7

8 Borrowings history R millions Expansion project borrowings Normal borrowings Jun- 07 Aug- 07 Oct- 07 Dec- 07 Feb- 08 Apr- 08 Jun- 08 Aug- 08 Oct- 08 Dec- 08 Feb- 09 Apr- 09 Jun- 09 8

9 Changes in Borrowings since December 2008 Net borrowings (Rm) Average daily borrowings (Rm) Debt/ Equity % Monthly interest cost (Rm) Borrowings/ Annualized EBITDA Six month interest cover June ,2 12,0 3,2 2,2 Dec ,5 22,7 2,7 2,3 9

10 Borrowing Facilities R550m R900m R550m Covenants 360 day notice period Repayable R90m per annum 2010 to 2014 R450m final payment July 2014 Reducing to zero by January 2010 Debt service cover ratio Interest cover ratio 10

11 Rolled Products Sales Volumes Sales of tons vs tons in H1 08 (34% down) Local and export sales equally affected Automotive, construction, transport and general engineering sectors most affected Impact of destocking and geographic penalty May- 07 Aug- 07 North American Order Intake Nov- 07 Feb- 08 May- 08 sheet & plate Aug- 08 Nov- 08 canstock Feb- 09 May

12 Market Actions Produce Results Progress by USA and EU sales teams Depot stock for multi-user specifications Delivery and service performance strategies Effect of increased Delivered Duty Paid (DDP) shipments Order intake trends 12

13 Order Intake Rate Annualised Tons > tons < tons > tons > tons Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 13

14 Mix and Margins Percentage Index H1 High value products in mix Index of $ rolling margin per ton 90 14

15 Hulamin Improves Margins Some pressure on global margins Impact of Hulamin market initiatives Direct route to market Other service and delivery initiatives USA Selling Price Comparisons Index Index Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Hulamin Market Hulamin Market Product 1 Product 2 15

16 High Value Products Current Market Conditions Brazing Sheet Sharp decline in automotive sector Heat Treated Plate Can End Stock Foil End use Underlying firm Underlying firm applications and demand demand markets severely affected Outlook New opportunities emerging Global capacity issues Competitive position Strong reputation Further growth opportunities Environmental issues for PET Ramp up curve Product range Geographic spread 16

17 Manufacturing Costs Manufacturing costs reduced by 12% Melt loss benefit from lower LME price Energy cost benefit from lower oil/gas prices Unit costs increased by 14% as result of volume impact Effect of Eskom/municipal increases Incremental costs from new facilities Sustainable cost reduction measures continuing 17

18 Direct Manufacturing Cost Comparison 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% H1 Manpower Consumables Energy Maintenance Other 18

19 Jun-96 Jun-97 Jun-98 ZAR per m/ton Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 USD per m/ton LME Prices ZAR USD

20 Working Capital R716 million reduction in six months Aluminium price reduced from R18,100/ton in Q to R12,600/ton in Q Increased DDP shipments causing increase in inventories, matched by reduction in debtors Physical inventory reduced by 16% (22% excluding Delivered Duty Paid (DDP) effect) Metal hedging strategy Improvement in inventory profile 20

21 Changes in Inventory Profile 100% 80% 60% 40% 20% 0% Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Finished Goods Other Inventory Rolling Slab 21

22 Expansion Project Completion expected in accordance with schedule and 2% over budget R903 million spent to date. R67 million outstanding Initial output from foil mills and twin roll casters in Q3 Ramp-up curve integrated with business objective of tons annualised sales in 2013 Attractive conditions for growth of foil sales. Less certain for plate products. 22

23 Foil Mill FM8 23

24 Twin Roll Caster 24

25 Hulamin Extrusions Wholly owned since December 2008 Two entities trading as Hulamin Extrusions and Hulamin Building Systems Operations in Pietermaritzburg, Midrand and Cape Town Fifty percent shareholding in Richards & Barlow 25

26 Hulamin Extrusions Sales volumes down 35% compared to H Metal price impact on Q1 earnings Positive earnings in Q2 in spite of reduced volumes Market share and competitive landscape 26

27 Billet and Slab Supply Issues Hillside tons melting ingot export sales tons melting ingot tons slab Bayside tons slab Rolling Slab tons HLM Rolling Mill Sales tons HLM Remelt tons scrap 27

28 Billet and Slab Supply Issues tons of Al produced in Richards Bay Approx. 50% of global smelter output is extrusion billet and rolling slab Hulamin produces approximately 70% of its slab and 50% of its billet requirements tons rolled products sales requires tons slab (assumed tons slab from smelter) Growth beyond tons will require additional slab capacity. 28

29 Billet and Slab Supply Issues (Cont) Options for additional slab include: Incremental expansion of in-house facilities Greenfield establishment of casthouse facility close to smelters or in Pietermaritzburg Interim import/ tolling arrangements Extrusion billet can be imported more readily Optimum solution linked to slab capacity expansion National issues (downstream employment, energy, environmental, etc. ) Capital, operating cost and timing issues 29

30 2009 Key Areas of Focus Rebuild optimum sales mix Restore manufacturing efficiencies Enhance sales mix and service levels in USA and EU Ensure smooth start-up and integration of casters and foil mills Entrench sustainable cost and efficiency improvements Conclude slab supply options Continue cash generation actions 30

31 2010 and Beyond Achieve Rolled Products growth target of tons by 2013 Grow sales of the four high value product groups by tons above the 2009 levels by 2013 Achieve sustainable cost/efficiency improvements exceeding R100 million per annum Address slab and billet supply requirements Achieve 16% ROCE target Manage balance sheet to accommodate further growth opportunities 31