Shandong Nanshan Aluminum’s Net Profits Down 30% YoY in 2012, Gross Profit Margin of Alumina Down Nearly 9% YoY

SHANGHAI, Mar. 25 (SMM) – According to Shandong Nanshan Aluminum’s 2012 annual report, the company reported RMB 14.87 billion in operating revenues in 2012, up 11.57% YoY. However, its profits declined 28.72% YoY to RMB 985 million and net profits attributable to its parent company also dropped 32.39% YoY to RMB 691 million.   

Operating revenues from aluminum and aluminum extrusion, its two major businesses, hit RMB 23.43 billion, with gross profit margin at 1.63%, down 0.64 percentage point. Operating revenues from alumina rose 15.65% YoY to RMB 3.73 billion, but gross profit margin was down 8.98% YoY to 4.92%, the biggest decline among all products.     

After the Indonesian government restricted bauxite exports in 2012, the company is actively negotiating with Indonesian bauxite supplier – MKU. Meanwhile, the company has signed bauxite contracts with Rio Tinto Group, Rusal and some domestic bauxite suppliers, partly easing its raw material shortages.  

The company said it will continue to source bauxite by importing. However, the debt crisis in Europe and the US has led to volatile movement in bauxite prices, thereby passing to alumina and aluminum prices. 

SMM believes that Chinese alumina smelters are capable of easing raw material shortfall resulting from Indonesia’s export restrictions on bauxite. That being said, it remains to be seen whether domestic companies can fully avoid bauxite shortages in the future.