In its annual report of 2008 published on March 29, Aluminum Corporation of China Limited (Chalco, SH: 601600; HK: 02600) reports a net profit drop of 99 percent, even worse than the market's expectations.
The report also shows Chalco attained an annual turnover of 76.725 billion yuan (US$11.233 billion), a slight decline of 9.94 percent year on year. However, the net profit assigned to the company's shareholders suffered a huge decrease of 99.17 percent, and only totaled 9.228 million yuan (US$1.351 million). Furthermore, after the deduction of extraordinary gains and losses, Chalco in fact recorded a deficit of 126 million yuan (US$18.45 million). The company's net gain per share drops below 1 Chinese cent, and bottoms at 0.068 Chinese cent, reflecting a 99.92 percent shrinkage compared with the same period of last year.
Non-ferrous expert Heng Kun from Essence Securities had expected Chalco's net profit from 2008 to be 840 million yuan (US$122.99 million), a plunge of more than 90 percent compared with 2007's 12.24 billion (US$1.79 billion).
In the report, Chalco claims the blizzard disaster at the beginning of 2008 and the earthquake in May both affected its performance. In addition, the international financial crisis, soaring raw material prices, and drop in sales have all driven the company into previously unforeseen difficulties.
Regarding the present economic situation, Chalco predicts another difficult year in 2009, and the company estimates its Q1 net will be in the red.
Chalco also plans to issue a batch of financing coupons and medium-term notes, totaling something less than 10 billion yuan (US$1.46 billion), aiming to raise cash among market investors in domestic banks. Chalco further explains that the short-term coupons are for working capital; they include but are not limited to replenishing the company's cash flow, raw material purchase and alumina import. The medium-term notes are to fund the company's medium-term cash need and project expenditure. Finally, the fund will be used to repay loans that are due, if a surplus is available.
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(China.org.cn by Maverick Chen, March 30, 2009)