Aluminium Corp of China (Chalco), the nation's largest smelter of the lightweight industrial metal, warned of more tough times for the industry as it said its interim net loss narrowed, largely on the back of one-off gains and government subsidies.
"There was no alleviation for the oversupply of the company's principal products and the market is likely to turn more gloomy," Chalco said in its interim results statement, adding it would try to cut losses in the second half.
Net losses for the year's first-half was 596.5 million yuan (HK$750.32 million), compared to a loss of 3.25 billion yuan in the year-earlier period, based on international accounting standards, the firm said in a statement to the Hong Kong stock exchange.
The result beat the average 2.27 billion yuan net loss estimated by two brokerage analysts polled by Bloomberg.
Chalco said its "other gains" amounted to 1.74 billion yuan in the first half, up from a loss of 178 million yuan a year earlier.
They mainly came from accounting gains from the stake dilution in Jiaozuo Wanfang, a smelting unit, as well as the acquisition of Ningxia Energy, a coal and electricity producer.
It also booked "other income" of 528 million yuan, up from 268 million yuan in last year's first half. Such income is mainly government grants "to compensate the costs and the group's development".
Excluding the "other gains" and "other income," operating losses narrowed to 842 million yuan from 1.85 billion yuan.
First-half turnover grew 6.5 per cent to 71.11 billion yuan, due to a rise in external trading sales, and the booking of sales from newly acquired coal and power business in Ningxia Hui autonomous region.
First-half aluminium output fell 0.49 per cent to 2.03 million tonnes, while that of intermediate product alumina grew 1.8 per cent to 6.08 million tonnes.
Its average price for external sales of aluminium fell 7.7 per cent year on year in the first half, while that of alumina dropped 7 per cent.
Chalco also said a June deal on the divesture of aluminium processing assets and an alumina refining unit in Guizhou province to Chinalco will improve its asset and debt structure, resulting in a lower debt-to-asset ratio.
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