Jiangxi Copper first-half profit down 3.6pc on lower metals prices
Shares of Jiangxi Copper, China’s largest smelter of the industrial metal, fell 0.28 per cent to HK$14.26 on Thursday morning after it posted a 3.6 per cent drop in first-half net profit on Wednesday night on the back of lower copper and gold prices and higher finance costs.
First-half net profit declined to 1.19 billion yuan (HK$1.5 billion) from 1.24 billion yuan the same period last year, Jiangxi Copper said in a filing to Shanghai’s stock exchange. It amounted to 41 per cent of the average full-year estimate of 3.1 billion yuan by analysts polled by Thomson Reuters.
Revenue rose 5.64 per cent year on year as processed copper cathode output grew 1.8 per cent to 569,000 tonnes and gold output increased 3.8 per cent to 13.18 tonnes.
But that was offset by lower copper and gold prices. Jiangxi Copper did not give its average selling prices, but said first-half copper prices fell about 8.3 per cent year on year at the London Metal Exchange, while the average gold price declined 15.2 per cent.
Pre-tax profit excluding non-recurring asset and investment gains and losses dropped to 920 million yuan from 2.07 billion yuan in the first half of last year.
Besides lower metal prices, a 144 per cent rise in finance costs to 396.7 million yuan was also to blame for the profit decline.
Jiangxi Copper said it was cautious on the outlook for copper prices in the second half.
“As the [Chinese] government launched a series of policies to stabilise economic growth and increase liquidity, commodities prices have recovered somewhat by the end of June,” it said. “But with Indonesia resuming exporting copper concentrate and as global new copper-mining capacity is released, further upside of copper prices will be limited.”