Slide 1: Final Results Presentation Hulamin Limited
Final Results Presentation Hulamin Limited For the year ended 31 December 2008
Slide 2: Salient features
Salient features • Operating profit (before corporate structuring costs) up 22% to R465 million (2007: R380 million) • Normalised headline earnings per share increased by 16% • Volumes reduced by 7% in Rolled Products • Improved sales mix and margins in Rolled Products • Final dividend of 13 cents p
Slide 3: Income Statement
Income Statement R'million 2008 2007 Average exchange rate 8.27 7.05 Revenue 7 120 6 568 Underlying Operating Profit 411 358 Operating profit (before corporate struct. costs) 465 380 Corporate structuring costs - (168) Operating profit 465 212 Share of associate company's profit 1 - Finance costs (1
Slide 4: Underlying Operating Profit
Underlying Operating Profit 500 400 R millions 300 200 CAGR = 33% 100 0 2003 2004 2005 2006 2007 2008 2003 2004 2005 2006 2007 2008 Ave R/$ 7.56 6.45 6.37 6.77 7.05 8.27 4
Slide 5: Balance Sheet
Balance Sheet R'million 2008 2007 Non-current assets 4 815 4 213 Current assets 2473 1978 Inventories 1 325 964 Trade and other receivables 1060 1 014 Net derivative financial assets 44 0 Assets of disposal group held for sale 44 0 TOTAL ASSETS (excl cash) 7288 6 191 Total Equity 3 760 3 529 Total n
Slide 6: Cash Flow
Cash Flow R'million 2008 2007 EBITDA 641 561 Corporate structuring costs - (168) Derivatives and Non-cash items 136 202 Tax payments (137) (13) Funds generated from operations 640 582 Inventories (397) 25 Debtors (46) 36 Creditors (42) (204) Funds required by operations (485) (143) Cash flow from op
Slide 7: Recent Aluminium Price Movements
US $ 1 400 1 800 2 200 2 600 3 000 3 400 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 US$ Price Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 ZAR Price Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Recent Aluminium Price Movements 15 000 17 000 19 000 21 000 23 000 25
Slide 8: Borrowings
Borrowings • Net borrowings at December 2008 were R1747 million • Facilities of R2000 million (1 January 2009) as follows: – R900 million fixed term repayable 2010 to 2014 – R550 million on 360 day notice – R550 million reducing April 2009 to January 2010 • Capital expenditure requirements for 2009
Slide 9: Inventory
Inventory • Invoicing terms/revenue recognition • Finished goods strategy in light of market conditions • Contractual procurement commitments • Coated scrap processing • Short term reduction measures (>20%) 95 90 85 80 Days 75 70 65 60 55 50 2004 2005 2006 2007 2008 9
Slide 10: Rolled Products Sales Volumes
Rolled Products Sales Volumes • Sales of 180 000 tons in 2008 down from 193 000 tons in 2007 • Second half 85 000 tons vs. 95 000 tons in first half of 2008 • Local sales unchanged after 17% increase in first half • Sustained growth of sales into packaging sector; other sectors weakening • LME price
Slide 11: Mix and Margins
Mix and Margins • Total volume in high value sectors maintained • Continued increase in average rolling margin 65 140 60 130 Percentage 55 120 50 110 45 100 40 90 2003 2004 2005 2006 2007 2008 High value products in mix Index of $ rolling margin per ton 11
Slide 12: Unit Cost Performance
Unit Cost Performance • Total costs affected by energy and alloying costs • Unit costs further affected by reduction in volumes 105 100 $ per ton index 95 90 85 2004 2005 2006 2007 2008 12
Slide 13: Direct Manufacturing Cost Breakdown Comparison
Direct Manufacturing Cost Breakdown Comparison 100% 90% 80% 70% Percentage 60% 50% 40% 30% 20% 2006 2007 2008 Manpower Consumables Energy Maintenance Other Note: Excludes Materials and Paint/Lacquer costs 13
Slide 14: Energy as a % of Direct Manufacturing Cost
Energy as a % of Direct Manufacturing Cost 26 24 22 20 Percentage 18 16 14 12 10 2003 2004 2005 2006 2007 2008 14
Slide 15: Gas Price Trend
Rand Price Index 50 100 150 Jan-06 200 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Gas Price Trend Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08
Slide 16: Magnesium and Aluminium Price Trend
0 1 000 2 000 3 000 4 000 5 000 6 000 Jun-01 7 000 Sep-01 Dec-01 Mar-02 Jun-02 Sep-02 Dec-02 Mar-03 Jun-03 Sep-03 Dec-03 Mar-04 Jun-04 Sep-04 Magnesium Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Aluminium Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Magnesium and Alumi
Slide 17: Expansion Project Status
Expansion Project Status • Project on schedule • Training and commissioning activities re-prioritised • R20 million overrun expected • R185 million still to be spent • 300 Contractors on site • Exceptional safety performance • Short term capacity utilisation • Medium term outlook 17
Slide 18: Expansion Project
Expansion Project P= " |
Slide 19: Expansion Project
Expansion Project RIE I | De el lol ie ; i" Tl Omen’ mT ed
Slide 20: Expansion Project
Expansion Project 20
Slide 21: Expansion Project
Expansion Project 21
Slide 22: Significant Changes to Industry Outlook
Significant Changes to Industry Outlook • Demand softening sharply in all regions • Transport, automotive and construction worst affected • Falling 3-Month LME price, rising LME inventories • Exceptional destocking • Global capacity curtailments – Many smelter closures – Rolling plants closing, retr
Slide 23: Hulamin Extrusions
Hulamin Extrusions • Operating profit (before corporate structuring costs) reduced from R22 million to R12 million • Local sales unchanged after strong H1 • Margins in second half impacted by falling LME Aluminium price • Market development costs impacting negatively on earnings • Acquisition of Hyd
Slide 24: Hulamin Response to Economic Downturn
Hulamin Response to Economic Downturn • Short term cost reduction measures – Eliminating discretionary costs – Extended December/ January shutdown – Reducing shifts (4- to 3- shifts) and redeploying staff – 5-Day working week in most manufacturing areas – Reducing headcount and curtailing overtime –
Slide 25: Short Term Outlook
Short Term Outlook • End user markets sharply down in automotive, construction and transport • De-stocking well advanced • Several new market opportunities • Different margin dynamics in various sectors • Stable local market at lower levels • Difficult first quarter with initial signs of improvement
Slide 26: Medium Term Outlook
Medium Term Outlook • Fundamental demand drivers based on proven product benefits • Grow volumes based on: – Existing competencies – Product range – Geographic footprint – Competitive cost position • Optimize benefits from Expansion projects • Further scope to improve margin • Currency sensitivity •