Chalco aims to break even in H2 after Q2 loss

Aluminum Corporation of China Limited aims to break even by year end after posting a bigger than expected quarterly loss, which sent its shares lower on August 25th 2009.

Analysts said that China's top alumina and aluminium producer, also known as Chalco recorded gross losses in all segments in the H1 of the year, resulting in higher production costs on a low utilization rate.

The company announced its results late on August 24th 2009 including a Q2 loss that was 4 times bigger than analysts had expected.

Mr Becky Yuen a research analyst at Guoco Capital said that "The results are disappointing and it's a big miss against our forecast of a breakeven in the Q2."

Chalco, whose state owned parent Chinalco failed to clinch a USD 19.5 billion equity tie up deal with Anglo Australian miner Rio Tinto in June is optimistic about aluminium pricing. Chalco forecast global aluminium prices to hold at USD 1,800 per tonne to USD 2,300 per tonne for the rest of the year against an LME aluminium price MAL3 of around USD 1,920 per tonne on August 25th 2009.

Mr Luo Jianchuan president of Chalco said that domestic prices were expected to range from CNY 14,000 per tonne to CNY 16,000 per tonne.

Mr Xiong Weiping chairman of Chalco said that "We must work hard not to lose money in the H2 and from the full year perspective we will try to end the losses that we saw in the H1."

Chalco reported a net loss of CNY 1.63 billion for April and June on weak demand and prices as the financial crisis battered aluminium producers and their clients in the automotive and construction industries. It missed an average forecast of a CNY 445 million loss from 6 analysts polled by Reuters and compared with a restated profit of CNY 1.14 billion in the same period of 2008.

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