Jiangxi Copper, the country's largest smelter of the metal, warned its net profit for the first half will slump more than 50 per cent from a year earlier if the price of copper does not rise substantially in the second quarter. The warning, given in a statement last night, comes as the company reported that net income dropped 89.27 per cent to 151.77 million yuan (HK$172.21 million) in the first quarter from 1.41 billion yuan in the same period last year. Still, the results were a turnaround from a 1.41 billion yuan net loss in last year's fourth quarter when it took a big hit from futures trading losses. First-quarter turnover dropped 28 per cent to 9.88 billion yuan. Jiangxi Copper did not disclose the average selling prices of its products or sales volume, but the latter is expected to have risen. The firm said early this month that it planned to produce 800,000 tonnes of copper cathode this year, up 14.3 per cent from last year's 700,000 tonnes. The three-month copper futures price on the London Metals Exchange averaged US$3,487.50 a tonne in the first quarter, down 54.8 per cent from the year-earlier period. Operating costs fell 16.75 per cent year on year to 9.82 billion yuan, less than the decline in turnover, indicating a sharp profit margin squeeze caused by lower copper prices. The company booked an investment gain of 147.5 million yuan in the first quarter, which it said was due to a partial write-back of futures contract losses it incurred last year, as copper prices rose in the quarter. Last year, it booked a 1.36 billion yuan loss on commodity derivative deals, which management said were purely for hedging its normal operations. However, some analysts said suffering such a large loss might indicate the company over-hedged. The London futures contract price for copper rose to US$4,040 a tonne at the end of March, up 31.6 per cent from US$3,070 at the end of last year. BOC International analyst Belle Chan said the company's results were worse than her expectations. She estimated the company would post a full-year net profit of 1.3 billion yuan, or an average per-quarter profit of 325 million yuan. 'While overall profit was dragged down by lower copper prices, last year higher profit from sulphuric acid sales was able to offset its downstream smelting loss,' Ms Chan said. 'I believe sulphuric acid profit has fallen a lot in this year's first quarter.'