Aluminium products manufacturer Hulamin says export pricing pressure and market challenges have eroded some of its earnings in the six months ended June 30.

According to Hulamin CEO Mark Gounder, while the weak global market continued to have a negative impact on the company’s overall performance, Hulamin’s “agility” enabled it to withstand the global market shocks.

“The strategy Hulamin has developed over the past two years makes it possible for us to react appropriately to market changes,” he said.

Hulamin’s can business, which during the Covid-19 period suffered as a result of alcohol sale restrictions, now makes up 67% of the company’s domestic sales. The growth in the company’s can business, said Gounder, presented Pietermaritzburg residents, including can collectors, with an opportunity to generate more income.

Hulamin, which produces a number of aluminium products, has in recent years been cutting back on the production of products with a lower margin and putting more focus on those with a higher margin.

“Management’s focus is on optimising the available plant capacity towards higher margin products and a comprehensive focus on cost curtailment in line with reduction in volumes,” said Gounder.

Hulamin supplies 60% of can-body stock, but it aims to supply more wide width can bodies. Currently, 23 000 tons of wide can-body product is being imported every year, which Hulamin has determined as a vital market opportunity.

The group plans to add a 15 000 tons widebody can line in South Africa, with seven out of nine can lines in the country now being designed to use wide-width can-body coils to maximise efficiencies.

Ultimately, the wide can-body plant expansion is spread across three phases, with the first phase having been completed in June, the next phase due to be completed later in the year and the last phase late next year.

The increased use of recycled beverage cans will also help to reduce costs for the group. Gounder says using recycled material bodes well for the group in terms of enterprise development, green product development and value creation.

Hulamin’s operating profit decreased eight per cent to R433 million when compared to the previous year. In the current reporting period, Hulamin spent R302 million on capital investments, mainly around the beefing up of the company’s production plants.

While the company’s international market, which was currently on the rebound, remains key, Gounder said the bulk of the company’s capital investments would be aligned to Hulamin’s strategy to stimulate local consumption.

“The group’s commitment towards positioning the group for long-term growth to benefit from growth markets remained our core focus with R99 million being allocated towards projects to enable the production of a wide can body and enable increased scrap utilisation,” Gounder said.

Apart from setbacks due to the softening global market, Hulamin in the first half of 2024 also encountered production challenges after one of its plants caught fire.

“The recovery in our export market segment has had a temporary setback following the fire outbreak in the coil coating line impacting mainly the export can end and tab markets.”

Hulamin, whose global customers include electricity car maker Tesla, could see substantial domestic market growth should the South African government go-ahead with plans to set up a fund to support the growth of the electric car manufacturing sector in the country.