Hulamin released a cracking set of the results for the year ended December 2021. Much of it seems to have been priced in, as the company only closed 2.8% higher.

The result was strong right from the top, with sales volumes up 34% and revenue up 52%. This means that the result was driven by both production and pricing improvements, the holy grail for any industrial company.

Local sales were up 54% thanks to increased beverage can consumption and import duties on aluminium flat rolled products into South Africa. This is a good example of where trade policies can support local industry, something a company like PPC is screaming out for in the cement industry.

Thanks to the benefits of operating leverage, operating profit increased by a whopping 760% to R538 million. The group has swung from a headline loss per share of -94 cents to HEPS of 82 cents.

Cash flow conversion lagged operating profit growth, with free cash flow from operating activities up 166% to R239 million. Hulamin is working capital intensive, requiring net working capital investment of R346 million in 2020 and R291 million in 2021. Working capital is the net of inventories, accounts receivable, accounts payable and related derivatives.

Momentum looks promising into the new financial year, with a positive narrative around demand and pricing.

Despite the much stronger result, there’s still no dividend. The share price of R4.75 reflects a Price/Earnings multiple of 5.8x.