Chalco Forecasts Full-Year Profit After Quarterly Loss

Oct. 25 （Bloomberg） -- Aluminum Corp. of China Ltd., the nation’s biggest producer of the metal, forecast a full-year profit even as it reported a consecutive quarterly loss after government power controls curbed aluminum output.

Chalco, as the Beijing-based company is known, had a loss of 117.8 million yuan （$17.7 million） for the three months ended Sept. 30, according to a statement sent to the Shanghai stock exchange. The loss compared with a profit of 21 million yuan a year earlier.

China, the world’s biggest aluminum producer, has started to control the output of energy-intensive industries including steel and aluminum in some regions to meet energy-saving targets. Aluminum prices have surged 21 percent since end-June after Chalco and other producers curbed production.

“The production cut pushed up aluminum prices,” said Owen Liang, a Shenzhen-based analyst at Guotai Junan Securities Co. before the result. The increased prices then helped to partially offset the lower production, he said.

Shares closed 0.4 percent higher at HK$7.88 at 4 p.m. in Hong Kong. In Shanghai trading, Chalco rose 4.4 percent to close at 12.86 yuan before the earnings announcement.

Full-Year Profit

Sales rose to 29 billion yuan in the quarter from 17 billion yuan a year earlier, the company said.

“We expect to make a profit for the full-year period,” Chalco said, without elaborating. It had a profit of 413 million yuan for the nine-month period ended Sept. 30.

“The global economy continues to recover and the Chinese economy grew steadily, fueling aluminum consumption,” the company said in the statement. “Measures to cut costs have begun to take effect, and the sales and profitability of main products are improving.”

Chalco has shut 10 percent of its aluminum-making capacity after local governments implemented power restrictions, analysts Heng Kun at Essence Securities Co., and Wan Ling, a senior consultant at CRU International Ltd, said last week.

Chalco didn’t comment on production cuts in the statement.

Smelting plants with a combined capacity of at least 400,000 tons were closed, and those plants are in Henan, Guangxi, Guizhou and Shanxi, Essence’s Heng said on Oct. 22.

Aluminum futures in Shanghai averaged 15,410 yuan a ton in the quarter, up 5.9 percent from the same period of 2009, according to Bloomberg data. Chinese authorities raised power surcharges for some smelters by as much as 100 percent from June to curb overcapacity.

Chalco’s unit Jiaozuo Wanfang Aluminum Manufacturing Co. in Henan province said Oct. 18 that it halted one-third of its annual production capacity due to power shortages.