BEIJING (Reuters) - China Hongqiao Group said on Friday that a doubling of alumina sales helped offset lower aluminum production and prices, leaving its net profit steady in the second half of 2018.
The world’s biggest aluminum producer said its full-year net income came in at 5.41 billion yuan ($805.97 million) in 2018, implying a second-half profit of 3.6 billion yuan, down 0.9 percent from a year earlier.
Full-year profit was up 5.4 percent despite lower revenues as Hongqiao avoided a repeat of steep impairment charges in 2017, when it had to close 2.68 million tonnes of illegally built smelting capacity.
The smelter shutdowns “led to a corresponding increase in alumina available for sale,” Shandong-based Hongqiao said, allowing it to cash in on shortages of the aluminum raw material last year, when alumina prices spiked before crashing back down in the fourth quarter.
Hongqiao’s 2018 alumina sales volume increased 117.9 percent to 4.09 million tonnes. With no new alumina capacity added in China last year, the company’s 1 million tonne-per-year alumina plant in Indonesia saw “booming production (and) further improved the net profit,” it said.
Alumina sales accounted for 12.2 percent of total sales in 2018, compared with 4.7 percent in 2017.
This meant full-year revenues were down only 7.9 percent year-on-year to 90.19 billion yuan even after an 18 percent drop in aluminum alloy product sales volumes to 5.865 million tonnes.
Shanghai aluminum prices fell by 13.9 percent in 2018 due to sluggish demand in China, the world’s top consumer of the metal, whose economic growth is slowing amid an ongoing trade war with the United States.
“The group expects that the aluminum industry in China will continue to face various challenges brought by the uncertainties in the global trade market in the short term,” Hongqiao said.
Reporting by Tom Daly, editing by Louise Heavens
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