Citic Resources Holdings issues profit warning

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In a release, Citic Resources Holdings made an announcement that the Group is expected to record a significant loss for the year ended 31 December 2012. 

The expected loss is principally attributable to, in addition to the reasons disclosed in the First Profit Warning, the following reasons:

(A) as a result of an expected increase in the decline in the results of CITIC Dameng for the year ended 31 December 2012 as compared with the year ended 31 December 2011 as announced by CITIC Dameng on 1 February 2013, the amount of the Group’s proportionate share in the lossexpected to be recorded by CITIC Dameng will be greater; and 

(B) as a result of the prevailing share price of CITIC Dameng relative to the carrying amount of the Group’s investment in CITIC Dameng and the negative effect of current weak prices for manganese and manganese products, the Board has conducted an assessment of the Group’s investment in CITIC Dameng and consider it prudent to make a non-cash provision in respect of such investment.

The non-cash impairment loss is expected to be substantial but should not have a material adverse effect on the Group’s cash flows.

The Board remains of the view that manganese is a strategic resource important in a number of industries, not least the steel industry in the PRC, and expects demand and prices for manganese and manganese products to improve in the medium to long term.

The Company still holds positive views on its investment in CITIC Dameng and believes the performance of CITIC Dameng will turnaround when the market improves.