Chalco earnings dive 92pc as expenses surge
Aluminum Corp of China (Chalco), the country's largest producer of the metal, said higher prices of raw materials, energy and fuel knocked 92 per cent off net profit in the three months to September compared with the previous year, to 182.89 million yuan (HK$207 million).
The global economic slowdown squeezed demand, resulting in a significant fall in prices of the group's major aluminium products, Chalco said in a statement yesterday.
Receivables, inventories and financial expenses soared as part of a set of poor results compiled according to the mainland's accounting standards.
Earnings per share stood at 1.4 fen in the quarter, while revenue shrank 7.9 per cent to 19.08 billion yuan.
In the first nine months, net profit slumped 72.1 per cent to 2.58 billion yuan, or 19.1 fen per share, as revenue fell 7.4 per cent l to 58.69 billion yuan.
The company recently announced a plan to reduce production capacity by 18 per cent on weakened demand and waning selling prices. In the third quarter, production output of alumina grew 5.8 per cent to 2.54 million tonnes, with alumina chemicals up 7.7 per cent to 280,000 tonnes. Primarily aluminium products soared 25 per cent to 900,000 tonnes.
Against the backdrop of the credit crunch, finance expenses skyrocketed 472.44 per cent to 367.34 million yuan in the third quarter and surged 270 per cent to 652.55 million yuan in the first nine months.
Aluminium prices have slumped 33 per cent from their peak on expectations that the global financial meltdown will depress demand for the raw material from manufacturers of vehicles, consumer goods and aircraft.
At the current price of about 13,900 yuan per tonne, even the lowest-cost smelters are losing as much as 1,000 yuan per tonne, according to a JP Morgan report.
To avoid losses, Chalco was expected to close aluminium smelters in Shandong and Henan provinces and pare alumina capacity at its Shandong plant by half, or 1 million tonnes.
The mainland's spot prices for alumina, the main material for aluminium production, have come down nearly 40 per cent so far this year to about 2,650 yuan per tonne on increased supply from new capacity.
Chalco shares slipped 42 HK cents, or 14.4 per cent, to HK$2.48 on Friday. The shares declined 48.3 per cent over the past month and have fallen 66 per cent over the past three months.
Aluminium prices have dived 33 per cent from their peak, sending Chalco's share price down over the past 3 months by: 66%