Chalco returns to profit in first quarter on asset disposals
Aluminum Corp of China Ltd, known as Chalco, said on Monday its profits rose 46 percent year-on-year in the first quarter as aluminium prices stabilised and asset disposals swelled its bottom line.
Chalco, the listed arm of China's biggest state-owned aluminium firm, Chinalco, posted net income of 444.9 million yuan ($66.08 million) in January-March, according to a filing to the Hong Kong stock exchange.
That compares with an adjusted net profit figure of 304.5 million yuan in the first quarter of 2018 and a net loss of 626 million yuan in the fourth quarter, when Chinese aluminium prices slumped to two-year lows.
Revenue came in at 44.11 billion yuan in the first quarter, up 20.1 percent year-on-year on higher production. Chalco last year overtook Rusal as the world's second-biggest listed aluminium producer, churning out 4.17 million tonnes of the metal.
Aluminium prices on the Shanghai Futures Exchange were broadly flat in the first quarter, still languishing beneath the 14,000 yuan a tonne mark many smelters need to break even.
With margins squeezed, Chalco in January said it was shutting a 200,000 tonnes per year plant in Shandong, citing high electricity costs, among other factors. That followed production cuts made at other Chalco facilities in November
However, Chalco's first-quarter result was lifted by investment income to the tune of 415.3 million yuan through disposal of subsidiaries, joint ventures and associates.
These include the disposals of a 60 percent equity interest in power distribution firm Ningxia Fenghao and a 40 percent stake in Inner Mongolia Fengrong to parent Chinalco.
So far this quarter, aluminium prices in China are up 3.2 percent around 14,200 yuan per tonne as demand recovers in the peak-consumption second quarter, easing the pressure on smelters.
($1 = 6.7332 Chinese yuan renminbi)
(By Tom Daly; Editing by Emelia Sithole-Matarise)