BEIJING (Reuters) - Aluminum Corp of China Ltd (601600.SS) (2600.HK), known as Chalco, said on Tuesday its net profit crashed by 93.1% year-on-year in the first quarter as the coronavirus outbreak hammered the company’s sales.
Beijing-based Chalco, the listed arm of China’s state-owned aluminium producer Chinalco, posted net income of 30.7 million yuan ($4.34 million) in January-March 2020, down from 444.9 million yuan in the first quarter of 2019, according to a filing to the Hong Kong stock exchange.
That marks Chalco’s worst quarterly result since it posted a net loss of 629 million yuan in the fourth quarter of 2018, Refinitiv Eikon data show. It had only managed a 42.6 million yuan profit in the fourth quarter of 2019.
First-quarter revenues were down 8% year-on-year at 39.67 billion yuan in a brutal three months for aluminium smelters in China, the world’s biggest producer and consumer of the metal, as demand collapsed due to the epidemic and panicked investors sold off commodities across the board.
“Affected by the outbreak of COVID-19, the market price of the company’s leading products decreased significantly,” Chalco said in the filing.
Amid price volatility, it was able to realise a 404 million yuan hedging gain, however. Excluding this and other one-off items, Chalco would have reported a 291 million yuan loss.
Shanghai aluminium prices SAFcv1 fell by 17.6% over the three months, the steepest quarterly drop since 2008, and hit a four-year low of 11,255 yuan a tonne in late March - well below average break-even prices.
Prices sank further to 11,230 yuan in early April but have since recovered to around 12,500 yuan, supported by a greater call on primary metal amid shortages of scrap.
Chalco had said earlier this month that it would consider placing some aluminium production lines on maintenance or even shuttering them because of low prices, and may also cut output of raw material alumina SMM-ALM-AVEG, prices for which have also picked up from four-year lows.
($1 = 7.0789 Chinese yuan renminbi)
Reporting by Tom Daly, editing by Louise Heavens