Chalco earnings dive 93% in Q3

ALUMINUM Corp of China Ltd, the country's largest producer, said yesterday its third-quarter earnings slumped 93 percent as metal prices dropped and slowing economic growth hurt demand.

Net income fell to 182.9 million yuan (US$27 million), or 0.014 yuan a share from 2.29 billion yuan, or 0.191 yuan, a year earlier, the company, known as Chalco, said in a statement to the Hong Kong stock exchange, citing domestic accounting standards. Sales dropped 7.9 percent to 19.1 billion yuan.

Chairman Xiao Yaqing is shutting plants and curbing expenditure to counter a 22-percent drop in metal price this year as China's economy grows at the slowest pace in five years. Alcoa Inc, the largest United States aluminum maker, on October 7 posted a 52-percent decline in third-quarter profit.

Chalco's shares have slumped 85 percent this year in Hong Kong trading, worse than the 55 percent drop in the benchmark Hang Seng Index. The stock fell 14 percent on Friday to close at HK$2.48 (32 US cents). Its yuan-denominated shares dropped 2.1 percent to 6.57 yuan in Shanghai, Bloomberg News said.

The Beijing-based company forecast on October 6 that its third-quarter profit would drop by more than 50 percent, and last Wednesday said it will cut annual aluminum production capacity by 18 percent. JPMorgan & Chase Co and CICC's Ding expect Chalco to post a loss in the fourth quarter.

Aluminum futures dropped by more than a fifth this year to 13,825 yuan a ton on Friday on the Shanghai Futures Exchange.

Chinese smelters have an average production cost of 18,000 yuan to 18,500 yuan a ton, according to JPMorgan.

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