Chalco Q3 profits jump on cost cuts; aluminium production falls
Chalco Q3 net at 416.06 mln yuan vs 103.87 mln yuan yr earlier
Firm's Q3 aluminium production falls 5.3% to around 900,000 T
Shanghai aluminium prices hit highest in 2-1/2 years last week
Oct 27 (Reuters) - Aluminum Corp of China Ltd 601600.SS, 2600.HK, known as Chalco, said on Tuesday its net profit quadrupled in the third quarter from a year earlier as a substantial cut in operating costs offset lower production volumes.
Chinese smelters are currently enjoying strong aluminium prices SAFcv1 after a stellar recovery from the coronavirus outbreak. Prices rose nearly 7% over the third quarter to well above break-even levels and last week hit their highest in 2-1/2 years at almost 15,000 yuan ($2,240) a tonne.
Chalco, however, was unable to fully cash in as its primary aluminium production in the first nine months of 2020 slipped by 2.8% from a year earlier to 2.76 million tonnes, implying a 5.3% year-on-year drop in third-quarter output to 900,000 tonnes.
The Beijing-based company, which last week appointed Zhu Runzhou as its new president, said in a Hong Kong stock exchange filing that its net income stood at 416.06 million yuan for July-September, versus 103.87 million yuan a year earlier.
That marked Chalco's best profit since the first quarter of 2019, according to Refinitiv Eikon data.
Revenues were down 3.5% to 49.05 billion yuan but a 5.2% cut in total cost of operations saw Chalco firmly in the black.
In the first nine months, profits was down 44.3% year-on-year to 451.78 million yuan, reflecting low aluminium prices in the first quarter in the immediate aftermath of the coronavirus outbreak and higher impairment provisions for bad debt.
Chalco's output of alumina meanwhile stood at 10.74 million tonnes over January-September, up 5% year-on-year and implying third-quarter output of 3.54 million tonnes, up from 3.41 million tonnes a year earlier.
Chalco shut 1.8 million tonnes of annual alumina capacity in July but started trial production at a new 2 million tonne capacity plant in Guangxi last month.
China's overall alumina output set an all-time high in September.
($1 = 6.7029 Chinese yuan renminbi)
(Reporting by Tom Daly; Editing by Susan Fenton)
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