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Integrated Report 2016

The business > Strategic objectives

Strategic objectives

	STRENGTHEN THE CORE (OF THE BUSINESS) TO COMPETE		KPIs		2016 Indicators
	Operational performance remains at the core of Hulamin's future success and growth. Manufacturing excellence and efficiency, customer satisfaction and strong margin and sales mix are all key drivers of operational performance, which will underpin the achievement of Hulamin's strategic vision. Hulamin has made significant strides during 2016 on improving production volumes and efficiencies, product yields, safety performance and product quality and while continuing to build on these successes, will focus on the following additional operational improvement areas: Aggressively attack costs and develop cost-focused culture to offset inflation Improve customer on-time delivery performance by re-engineering the sales and operations planning approach Stabilise operational performance through improved risk management approach Improve central coordination and strategic analysis capability to drive key decision-making in the business		Production volume growth Sales mix and margins Sustainable cost reduction Consistent and improving production, safety and quality performance		Rolled Products sales volumes increased by 19% over 2015 to 214 000 tons 5% year-on-year improvement on overall yield in Rolled Products despite a more challenging product mix Conversion costs reduced by 4% on a unit basis Overall USD/ton margins reduced by 16%, impacted by weaker product mix and increased market competition.

	Refer to page 80 for detail on the principal strategic risks associated with our strategic objectives

	INCREASE ROLLING MARGIN		KPIs		2016 Indicators
	With increased global competition in aluminium rolled products, particularly out of China, Hulamin will focus more acutely on higher value product categories and markets, to steadily improve overall margins. This will be achieved by: Re-focusing on higher value products and markets to grow defendable niche positions Investing in capability and technical partnerships to develop new, higher value products Re-engineering route-to-market sales strategies to drive increased margins Improve centralised profitability and product mix optimisation capability Maximising the benefits of locally available aluminium scrap to drive lower metal costs and thus higher margins Continuing to drive increase in local and regional sales		Overall USD/ton sales margins Number of new high-value products launched Percentage high-value sales mix Percentage of metal inputs from recycled scrap		Overall USD/ton margins reduced by 16%, impacted by weaker production mix and increased market competition Ramp up of can body stock product, however no new products launched in 2016 Percentage rolled product high value mix of total rolled product sales reduced by 3% 7.5% of metal inputs from purchased scrap in 2016

	INVESTING IN THE ASSETS OF TOMORROW		KPIs		2016 Indicators
	With increasing global competition in aluminium rolled products, for Hulamin to achieve a step change in margin realisation in the future, a significant shift is required in our sales mix to move further up the value curve. To achieve this, investments in new assets and capabilities are required that will allow us to significantly uplift our product offering. In conjunction with the move towards a more high value product mix, Hulamin is investigating options to re-configure the asset base away from lower margin products. Furthermore, as part of our transformation strategy, we are also looking at various opportunities to support the development of several upstream businesses in Richards Bay to grow the local beneficiation of primary aluminium into a range of value added products.		Overall USD/ton sales margins Percentage high value products in sales mix Growth in local beneficiation of liquid primary aluminium Number of new high-value products launched		Good progress has been made in identifying and scoping upstream business opportunities in Richards Bay for local aluminium beneficiation Renewed focus and resource allocation within Hulamin to drive new product development Potential investment and rationalisation projects have been identified and are being evaluated.

	Refer to the reliance and impact on key capitals section here for more information on how the key capitals support the delivery of our strategy and how we have fared against our key performannce indicators.