China's top aluminium maker Chalco Q3 net dives

Aluminum Corp of China Ltd, the world's No.3 alumina producer, said on Sunday its quarterly earnings plunged 92 percent, lagging forecasts, with its outlook clouded by high costs and sliding aluminium prices.

As China's largest producer of the metal tries to stabilise prices and cut costs, it has cut its aluminium capacity by 18 percent and alumina capacity by 10 percent.

But analysts say that is not enough to shore up prices of aluminium, which is widely used in the financially stressed construction and automobile industries.

"Chalco is likely to make a loss in the fourth quarter since Shanghai aluminium prices have come down to early 2003 level while costs remain high," Geoffrey Cheng, an analyst at Daiwa Institute of Research, said.

Shanghai's benchmark contract SAFc3 closed at 13,750 yuan a tonne on Friday and has lost 36 percent from its peak of 21,495 yuan in March.

The global aluminium market is heading for big surpluses in the next few years because smelters outside China have delayed cutting output despite weak demand and falling prices, analysts said.

The company, also known as Chalco, reported a net profit of 182.9 million yuan ($26.7 million) in the quarter ended September, down from a restated profit of 2.29 billion yuan in the same period last year, under Chinese accounting standards.

The result lagged the company's forecast of a more than 50 percent drop in third-quarter net profit.

Its total revenue for the third quarter fell 7.9 percent to 19.08 billion yuan but operating costs surged 46.5 percent to 12.16 billion yuan.

Threats of another round of electricity tariff hikes in China and an oversupply of aluminium clouded the company's earnings outlook, analysts said.

"We think that Chalco's operating environment is likely to remain difficult for the next 2-3 years," Macquarie said in a recent research report.

The stock lost nearly half of its market value in the third quarter and underperformed an 18 percent drop in the blue chip Hang Seng Index .HSI. It has lost nearly 85 percent so far this year, making it the third worst performing stock on the benchmark index.

It closed down 14.5 percent at HK$2.48 on Friday.

Copyright and Exemption Declaration :¢ÙAll articles, pictures and videos that are marked with "China Aluminum Network" on this website are copyright and belong to China Aluminium Network (www.alu.com.cn). When transshipment, any media, website or individual must list the source from "China Aluminium Network (www.alu.com.cn)". We seek legal actions against anyone that disobey this. ¢ÚArticles that marked as copy from others are for transferring more information to readers, do not represent or endorse their opinions or accuracy and reliability. When other media, website or individuals copy from our website, must keep the source. Anyone that changes the articles' sources will hold the responsibilities for copyright and law problems. We also seek legal actions against anyone that disobey this. ¢ÛIf any articles copied by our website concern the copyright and other problems, please contact us within one week.