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Profits halved for zinc giant

ZHUZHOU Smelter Group Co, China's biggest zinc smelter, said profit last year more than halved as prices collapsed and the company was forced to make provisions for losses on inventories. The shares declined.

"Zinc and lead prices went off a cliff, especially in the fourth quarter," the Zhuzhou, Hunan Province-based company said yesterday in a filing to the Shanghai Stock Exchange, without giving a precise profit figure for last year. Profit in 2007 totaled 79.5 million yuan (US$11.6 million), according to the statement.

China's metal companies, including zinc and steel producers, are posting profit warnings after the global credit crunch and recession slashed raw material demand and prices. Zhuzhou Smelter cut output by 20 percent in November, according to an executive.

"The company may have to extend production cuts through February," said Zhang Fang, an analyst at China Securities Co. "Zhuzhou's profit may be even worse in 2009." Zhuzhou Smelter declined as much as 3.8 percent and traded at 5.35 yuan at 11:05am, Bloomberg News reported. The stock has lost 80 percent in the past year compared with the 61-percent drop in the CSI 300 Index.


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