Chalco Third-Quarter Loss Widened Amid Lower Aluminum PricesMichelle Yun and Rachel Evans
Aluminum Corp. of China Ltd., the nation’s biggest producer of the lightweight metal, said a loss in the third quarter widened from a year earlier as prices dropped.
Net loss was 1.22 billion yuan ($200 million), compared with a loss of 1.08 billion yuan a year ago, the Beijing-based company said yesterday in a filing to the Shanghai stock exchange. Sales climbed 22 percent to 45.4 billion yuan.
Aluminum Corp., known as Chalco, is seeking to trim losses by controlling costs and disposing of unprofitable assets. It sold its aluminum fabrication business in June to its parent and said this month it plans to sell its stake in an African iron ore venture for about $2.07 billion.
“This quarter’s earnings show the inherent weakness in Chalco’s core business,” Sanford C. Bernstein & Co. analysts led by Vanessa Lau said in a report yesterday. “Instead of focusing on one-off intra-group transactions to improve its bottom line, we believe Chalco should pursue more fundamental restructuring measures to improve the health of its core business.”
The stock dropped 3.3 percent, the most in almost seven weeks, to close at HK$2.90 in Hong Kong. Chalco has fallen 18 percent this year.
Aluminum in London has fallen 8.7 percent this year through yesterday and averaged 6.2 percent lower in the third quarter from a year ago.
Chalco’s disposal of its fabrication unit would allow the company to avoid 500 million yuan of operating losses, Standard Chartered Plc said in an Oct. 18 report. Its proposal to sell its share of the Simandou iron-ore project in Guinea, a venture with Rio Tinto Group, to its parent will reduce Chalco’s capital expenditure burden, the bank said in the report.
The potential one-time gain from the Simandou sale “could help Chalco move above break even in 2013,” Credit Suisse Group AG analysts Trina Chen and Owen Liang said in a report today.
Chalco’s net loss for the first nine months of this year was 1.8 billion yuan, the company said yesterday. It had a full-year loss of 8.2 billion yuan in 2012, according to data compiled by Bloomberg.