China's aluminium firm Chalco back in profit, plans offshore bonds

Aluminum Corporation of China Limited (Chalco) moved back into profit in 2015 after a record loss in the previous year after the company cut costs, closed loss-making facilities and sold assets.

The company's board also gave approval for the issue of debt instruments, including up to $1 billion worth of offshore bonds, it said in a filing on the Shanghai stock exchange on Thursday. The planned issues are still subject to shareholder approval.

In 2015, Chalco posted a net profit of 206.3 million yuan ($31.84 million) versus a record net loss of 16.2 billion yuan in the previous year, according to the filing.

Chalco, a state-controlled leading producer of primary aluminium and raw material alumina in the country, returned to the black despite a fall in domestic aluminium prices.

The company said in the filing that it had implemented a series of measures to cut costs, including shutting obsolete and loss-making operations.

"In 2015, the global economy remained weak while the domestic economy experienced slowing growth," Chalco said. "The aluminium sector continued to suffer from oversupply and the entire industry went into the red as aluminium remained low."

The most active aluminium contract on the Shanghai Futures Exchange dropped 18 per cent last year, as the growth in the world's second-largest economy slowed. Chalco, the country's second-biggest primary aluminium producer after China Hongqiao Group sells its products mainly in the Chinese market. The company reported a loss for the first nine months of 2015.

Still, in the fourth quarter of 2015 Chalco announced sales of some assets, which included a logistic unit and a stake in an aluminium producer in Shanxi province.

Last year, the company said it planned to invest 400 million yuan in China Rare Earth Co, controlled by its parent Chinalco.

Chalco's results came after Hong Kong and China markets closed. On Thursday, its Hong Kong shares ended up 1.89 per cent, outperforming the main Hang Seng Index.

Its shares in Shanghai closed up 2.08 percent, outperforming the composite index.

($1 = 6.4786 Chinese yuan renminbi)