Wednesday 2011-07-27 
Huludao Zinc Industry (000751) reported a loss of 211 million yuan in net profit in the first half of 2011, plummeting 1,373 percent year-on-year, reports First Financial Daily, citing a company filing. Revenue increased 17.06 percent year-on-year to 3.7 billion yuan during the reporting period.

This non-ferrous metal producer incurred losses of 300 million yuan and one billion yuan between 2007 and 2008. The company earned 63.22 million in 2009, as it received the subsidy. In 2010, the company incurred a loss of 583 million yuan.

The company attributed the poor operating performance to a low zinc ingot price in the market and high smelting costs.

According to a recent smelting industry research report, the capacity utilization ratio for China’s zinc industry was 78.96 percent in the first half of 2011, a five-year low. Also, the growth of zinc output fell to 2.14 percent in the first half of 2011 from 31.01 percent in the same period in 2010.

Yunnan Chihong Zinc & Germanium (600497), another zinc smelting company, earned profit during 2008-10. It reported a 12-percent increase in net profit in the first quarter of 2011 to 95.53 million yuan.

The analyst in the securities thinks the losses in Huludao Zinc are because it does not have any mining assets.

The import of zinc ore declined 8.5 percent to 1.38 million tons in the first half of 2011, which influenced domestic zinc smelting enterprises.

China Metallurgical Group Corporation (MCC), which owns a zinc mine, bought Huludao Zinc in 2007 and injected two billion yuan into it for a 51.06-percent stake. However, MCC did not inject its zinc mine assets into Huludao Zinc, so that the company had to spend high cost to purchase zinc ore for smelting.

The analyst at the Shanghai Metals Market thinks electricity restrictions in some provinces and the decline of imported zinc ore from overseas will continue to affect China’s zinc smelting enterprises.

Source:capitalvue