Jiangxi Copper, the mainland’s largest smelter of the industrial metal, cautioned that the smelting industry will face more tough times, after it posted an 18.5 per cent decline in net profit for last year amid lower metal prices and persistent over-capacity.
The company had a net profit of 2.9 billion yuan (HK$3.6 billion) last year, down from 3.56 billion yuan in 2013, and in line with the 2.87 billion yuan average estimate of 18 analysts surveyed by Thomson Reuters.
“With the release of new production capacity in the coming years, the oversupply of copper concentrates will further be intensified,” it said in a filing to Hong Kong’s stock exchange on Thursday.
Is said the non-ferrous metal industry’s prospects were “far from optimistic”, with the downturn in the industry to accelerate, prompting mergers and restructuring.
Revenue rose 13.1 per cent to 198.26 billion yuan, on the back of higher sales volume of copper cathode, rods and wires, the company said.
But lower product prices meant gross profit margin of copper cathode fell to 2 per cent from 2.81 per cent, that of wires and rods decreased to 6.1 per cent from 7.24 per cent, and that of gold to 4.6 per cent from 7.32 per cent.