DJ UPDATE: Aluminum Corp Of China 2011 Profit Falls Sharply

Aluminum Corp. of China 2011 net falls 69.4% to CNY237.97 million

--Revenue up 20.6% at CNY145.87 billion

--Company says profit fell due to higher financing costs, debt burden, and higher fuel and raw-material costs

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SHANGHAI (Dow Jones)--Aluminum Corp. of China Ltd. (ACH, 2600.HK, 601600.SH), known as Chalco, said Saturday earnings fell 69.4% in 2011 because of higher financing costs in a tight domestic policy environment, a heavier debt burden, and higher fuel and raw-material costs.

The country's biggest alumina and aluminum producer by output reported a profit of CNY237.97 million (US$37.6 million) for 2011, compared with a profit of CNY778 million in 2010.

Revenue rose 20.6% to CNY145.87 billion from CNY120.99 billion in 2010, Chalco said.

The company didn't recommend a final dividend.

Chalco warned in January its 2011 profit was likely to slump more than 50% due to high electricity costs and falling aluminum prices that led to a substantial fourth-quarter loss.

Chalco, the world's second largest alumina producer after Alcoa Inc. (AA), also said demand had been affected by the euro-zone debt crisis.

China's aluminum industry is likely to grow at its slowest rate in more than three years in 2012, with consumption likely to rise just 5%-10%, the top executives of Chinese nonferrous metal producers said earlier this month. The industry is facing severe oversupply pressures with warehouse inventories at record levels, said the chairman of aluminum producer Henan Shenhuo Group, Li Chong.

Chalco President Luo Jianchuan warned in October that some of the firm's units would face "severe challenges" to their cash flow if product prices continue to fall.

Aluminum was one of the worst performers among major base metals on the Shanghai Futures Exchange in the fourth quarter, shedding 4.3% compared with a 2.9% rise for copper and a 2.1% drop for zinc.

Chalco was badly affected by the global financial crisis in late 2008, as falling demand for aluminum products led to a drop in prices even as electricity and raw materials costs rose, resulting in a record net loss of CNY4.65 billion for the company in 2009.

China's stimulus measures helped the firm by raising demand in the automobile and property sectors, but those policy boosters have been largely wound down.

"[Chalco is] an unattractive high-cost producer currently trapped in an aluminium market with oversupply and facing price weakness ahead," Bank of China International said in a note earlier this month.