Chalco’s H1 profit declines 95% Y-o-Y on lower aluminium prices and fall in production below Russian rival Rusal

Aluminum Corporation of China Limited, popularly known as Chalco, reported on Thursday, August 27, that its profit fell 95 per cent year-on-year in the first half of 2020, attributing to lower aluminium and alumina prices and decrease in primary aluminium production.

The net income of the company during H1 2020 came in at RMB 35.71 million, down from an adjusted RMB 707.41 million a year earlier. Last year’s first-half income was buoyed by a substantial gain on an asset sale, exacerbating the drop in earnings this year.

In the second quarter, Chalco’s profit was RMB 5 million, marking the company’s worst quarterly result since a net loss in the fourth quarter of 2018, according to Refinitiv Eikon data.

In terms of production, Chalco’s primary aluminium output in the first half of the year stood at 1.86 million tonnes, down from 1.89 million tonnes during the same period last year and also below Rusal’s production of 1.87 million tonnes during H1 2020.

However, Chalco’s alumina production rose by 5.74 per cent year-on-year during January-June to stand at 7.2 million tonnes, despite the shutdown of its three alumina production lines in July due to sluggish domestic prices of the ore.

Overall, Chalco’s first-half revenue fell 11.5 per cent to RMB 84.11 billion, given the Shanghai aluminium prices averaged 4.3 per cent lower Y-o-Y at RMB 13,191 per tonne.

Nonetheless, the Chinese aluminium prices have started rebounding in the third quarter, backed by the recovery in demand. Shanghai aluminium prices last week hit their highest since April 2018 at almost RMB 15,000 per tonne, indicating a positive outlook for Chalco in the second half of the year.