Aluminium Corporation of China Limited, popularly known as Chalco, posted the lowest annual profit in the last four years in 2020. It said in a filing that its net income fell 13.1 per cent year-on-year to RMB 741 million in 2020.
The company's revenues stood down by 2.2 per cent to RMB 186 billion even when Shanghai aluminium prices rose more than 20 per cent amid a strong rebound in demand for Chinese aluminium during the year-end. Chalco attributed the revenue drop to a decrease in trade.
In early March 2021, Shanghai aluminium prices climbed further to a new decade high but declined nearly 6 per cent on Tuesday on concerns China could release aluminium from state reserves.
Net impairments totalled RMB 1.41 billion, of which customer bad debt contributed RMB 979 million and long-terms assets contributed RMB 433 million after Chalco closed 135,000 tonnes of annual smelting capacity in Shandong.
“Due to the impact of the COVID-19 pandemic and changes in the external environment in 2020, some customers ... have encountered difficulties in their production and operation,” it said, putting the overall impact of impairments on net profit at 1.23 billion yuan.
Chalco’s primary aluminium production declined for the second consecutive year in 2020 by 2.6 per cent to 3.69 million tonnes in 2020. That was below China Hongqiao Group and Rusal’s output of 5.62 million tonnes and 3.76 million tonnes, respectively.
However, Chalco’s alumina production rose 5.3 per cent year-on-year to 14.53 million tonnes.
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