Chinese state-owned aluminum giant returns to profit

0 Comment(s)Print E-mail Xinhua, January 16, 2017
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China's largest aluminum producer returned to profit last year as its bold downsizing helped relieve the burden from loss-making "zombie" subsidiaries.

Aluminum Corporation of China (Chinalco) raked in nearly 1.9 billion yuan (around 276 million U.S. dollars) in operating profits in 2016, the best performance since the 2008 global financial crisis, with its cash flow at 12 billion yuan.

The gains were in sharp contrast with a loss of around 2.7 billion yuan in 2015.

"The substantial improvement came as the results of solid reforms in the past two years," Chinalco spokesperson Nie Zhen said.

In 2016, the state-owned enterprise (SOE) successfully dealt with 10 zombie subsidiaries, shut down 50 companies for consolidation, and set up an asset operation branch to eliminate inefficient assets and production capacity.

Thanks to the measures, Chinalco saw a falling debt-to-asset ratio, growing net assets, and abundant cash flow.

Weighed on by plunging aluminum prices, the world's second-largest producer suffered from continuous losses. Its listed subsidiary, in which Chinalco owns a controlling stake, reported its biggest-ever loss of 16.2 billion yuan in 2014.

Chinalco said it will likely remain profitable in 2017, a year Nie described as "a critical period" of revival for the company. Nie added that more reform measures are in the pipeline.

Chinalco is typical of the country's ongoing reorganization and consolidation of torpid SOEs. The government also pushed for mixed SOE ownership, encouraged M&As, and opened more industries to private capital.

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