Zhongjin Gold Corp., the listed unit of China’s largest gold miner, posted an 82 percent drop in first-half profit as bullion prices slumped and economic growth slowed.
Net income was 51.7 million yuan ($8.1 million) in the six months ended June, compared with a profit of 283.3 million yuan a year earlier, the Beijing-based miner said in a statement on Wednesday. Sales rose 11 percent to 17.7 billion yuan. Earnings per share were 0.02 yuan, down from 0.1 yuan a year earlier.
“The decline in gold and copper prices and increased finance charges are the main reasons for the earnings drop,” the company said in the statement to the Shanghai Stock Exchange after the market closed.
The average gold price in dollars was about 6.5 percent lower in the first six months from a year ago, as signs of an improving U.S. economy brought the Federal Reserve closer to raising rates, denting bullion’s appeal. Slowing Chinese economic growth also curtailed demand in the world’s biggest consumer of the metal.
Zhongjin Gold rose 1.9 percent to close at 10.58 yuan in Shanghai on Wednesday, paring this year’s drop to 0.4 percent.
Zhongjin’s results don’t reflect recent stock market volatility and a higher gold price after China’s surprise devaluation of the yuan earlier this month. The move underscores the importance of bullion as a tool to hedge against currency depreciation risk, Roland Wang, managing director of the World Gold Council in China, said last week.
China also announced in both June and July that it had increased its gold reserves as it seeks to diversify foreign-exchange holdings and boost the international profile of its currency.
— With assistance by Feiwen Rong, and Cathy Chan