China's industrial firms see slower profit growth

Source: Xinhua| 2017-12-27 16:20:49|Editor: Yamei
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A staff worker works at the assembly line at the factory of Anqing branch of Anhui Jianghuai Automobile Group Corp., Ltd. in Anqing City, east China's Anhui Province, Oct. 30, 2017. (Xinhua file photo/Jiang Sheng)

BEIJING, Dec. 27 (Xinhua) -- China's major industrial firms reported slower profit growth in the first 11 months, but saw progress in improving profitability and lowering debt levels, the National Bureau of Statistics (NBS) said Wednesday.

Businesses with annual revenue of more than 20 million yuan (about 3 million U.S. dollars) reported aggregate profits of 6.88 trillion yuan in the first 11 months, a 21.9-percent increase from one year earlier.

The growth marked a mild slowdown from 23.3 percent in the January-October period. In November alone, profits were up by 14.9 percent, down from 25.1 percent during the previous month and the weakest pace since April.

Combined revenue from main business was up 11.4 percent in the first 11 months, down from 12.4 percent in October.

NBS statistician He Ping said slowing price growth bit into corporate profits.

"Primary calculation showed price changes... reduced profits by 94.4 billion yuan month on month, dragging down the profit increase by 13.8 percentage points," he said.

He stressed that business performance had continued to improve, citing dropping costs, faster capital turnover rates and lower corporate leverage.

Industrial profit margins rose to 6.36 percent, up 0.54 percentage point year on year. The debt-asset ratio, which measures the business debt burden, dropped to 55.8 percent by the end of November from 56.3 percent a year ago, due to government efforts to defuse financial risks.

He said high-tech manufacturing remained robust as revenue growth and profit margins were well above the industrial average.

In a breakdown of 41 industries surveyed, 39 posted profit increases during the first 11 months, and only 2 logged shrinking profits.

Coal, ferrous metal, chemicals, oil and natural gas contributed 52.8 percent to the total profit increase. Profits in coal mining and cleaning grew the fastest, more than triple compared to a year ago, followed by machine repair and ferrous metal.

The industrial sector, which accounts for about one-third of China's GDP, started to pick up last year amid nationwide supply-side structural reform efforts, which include policies to trim excessive production capacity, reduce inventory, cut costs, deleverage, and address weak points.

The producer price index, which measures factory-gate inflation, rose by 7.8 percent in February, the fastest pace since 2008.

Industrial activities have softened during the past few months as regulators moved to curb financial risks and step up environmental protection.

Despite the retreat, Li Chao with Huatai Securities ruled out risks of a substantial slip, saying the industrial sector is resilient and the broader economy will also remain stable.

The country's GDP held steady to expand 6.9 percent year on year in the first three quarters.