Aluminum Corp of China (Chalco), the mainland's largest producer of the metal, has told the Hong Kong stock exchange it expects to announce a profit for the first quarter after recording a loss last year.
The chief reason for the turnaround, said analysts, was a rebound in aluminium prices.
While Chalco gave no detail, Taifook Securities analyst Robin Tsui forecast a net profit of 400 million yuan (HK$454 million). He said the company made heavy provisions for impairment for the last quarter of 2009 which dragged down profits.
Chalco reported a loss of 4.68 billion yuan for last year, compared with a net profit of 168.6 million yuan in 2008. It had to write-off a total of 674 million yuan for losses stemming from the disposal of obsolete smelting facilities and replacement of old environmental protection facilities, Helen Lau, senior analyst at UOB Kay Hian, said.
Revenue dropped to 70.27 billion yuan in 2009 from 76.73 billion yuan for 2008.
Analysts said this year Chalco would benefit from the return of global demand for aluminium, driven mainly by China, and higher prices of the metal.
Lau said in her research note that Chalco expected the rise in aluminium prices could cover expenses in the first quarter, resulting in it posting a profit estimate.