Aluminium products maker Hulamin — one of Tesla’s suppliers — seems to be a perennial contender for the company that could have been. Hopes that at last Hulamin’s time has come have sucked in shareholders for years, only to result in disappointment. At 241c, the share price is down almost 58% over five years, having spiked earlier this year to more than R5 on a takeover approach that was later withdrawn. Now its CEO of 12 years is leaving — without a replacement. The FM spoke to acting CEO Geoff Watson, a former nonexecutive director at the company and former executive at Alcoa and Rusal.
Are you looking inside Hulamin for your new CEO or casting the net wider?
We certainly have some candidates internally that we hope apply, but we’re also going to cast the net a lot wider within SA and internationally.
If you’re going abroad, is it quite a hard sell? Given Hulamin’s performance and SA business conditions?
I think it’s hard for a number of reasons; SA might be part of that for certain individuals and the stage of life that they’re at. But it’s more an issue of finding someone who has the skills to run this business. In the first instance, there aren’t that many aluminium rolling and extrusions and container businesses around the world, so there are not a lot of people who’d immediately qualify to come in and be CEO.
How long are you giving yourselves? Are you in this role indefinitely?
No, I’m here for a very definite period — for at least three months, and with an extension to six.
Rolling mills inherently can make money, and we should be doing well, we should be delighting our shareholders
You say Hulamin requires a specific set of skills — is that also indicative of Hulamin’s disappointing performance all these years, not least its lack of financial consistency? What is the CEO mandated to do now?
You have to analyse that in terms of Hulamin’s performance and its record. If you go back to 2018, 2019, things were improving at a very rapid rate; the plant — from an operational perspective — was running extremely powerfully; we were selling all the product we could make, it was a very nice period.
Then two things happened: there was a big disruption in the market because of [Donald] Trump’s changes to tariffs, and that interrupted our major export market (and everyone else’s for that matter). And then on top of that came Covid, its impact on our domestic market and our ability to be able to produce over the lockdown period. So you put those two together and it’s been two years of very ordinary performance for us. 2022 was looking a lot better, getting back towards 2019 levels, but there’s still a long way to go. It’s not as if we haven’t been severely impacted by factors beyond our control.
The sort of person we’d be looking at would be the person who can drive this recovery, who can take an aggressive look at our operating practices, our systems and incentives, plus someone who can [navigate] the markets that we’re in. They’re very diverse; we supply the US, Europe and various countries in Asia.
But can Hulamin make itself more immune to external shocks?
That’s the objective of any manager. At the end of the day, when you have a shock like Covid, it’s very hard to react to that and I think we did the best we could.
What’s the state of the aluminium market globally?
On a global basis there aren’t huge stockpiles. So if you look at the industry at the moment, we reached a peak of about $3,800 [per ton] in March, it’s now dropped down to about $2,400. That is China related, and lockdowns there, so demand has dropped. But there is a significant shortage of the metal globally, and as soon as China starts to pick up demand again I would expect aluminium prices will rise again. At the end of the day, it doesn’t affect Hulamin very much at all; we try to run our sales book in such a way that the metal [price] passes through to the customer. The volatility doesn’t really affect us, except in terms of cash flow.
Would you say there’s an obvious fix for Hulamin?
I’m hoping there’s going to be something very obvious as I walk around the factory or the sales office — but I haven’t found it yet. But if we keep doing the same thing we’re going to keep getting the same results, so there must be something we need to change because rolling mills inherently can make money, and we should be doing well, we should be delighting our shareholders.
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