China Aug Industrial Profits Hit 4-Yr High on Rising Prices

     BEIJING (MNI) - Chinese industrial companies saw profit growth accelerate

in August due to rising prices and lower costs, the National Bureau of

Statistics (NBS) said Wednesday.

     The combined profits of Chinese industrial firms rose 24% year-on-year to

CNY671.97 billion in August, up 7.5 percentage points from the 16.5% y/y growth

rate in July. The August growth rate was the highest since the 24.2% growth rate

recorded in August 2013.

     The NBS attributed the strong growth to high input and output prices as

well as declining production costs. "Output prices rose 0.8 percentage point in

August from July, meanwhile, input prices increased 0.7 percentage point," said

He Ping, an economist at the NBS. "The contribution of price growth accounted

for 31.2% of newly added profits of CNY127.3 billion, up CNY40.6 billion

compared with July."

     Overall costs for industrial firms continued to fall in August,

contributing to profit growth, He said. The cost of every CNY100 of income

generated by an industrial firm's primary business stood at CNY85.44, or CNY0.64

lower on an annualized basis, He said.

     The strong performance was also boosted by solid profit gains in key

manufacturing sectors. Profits in the oil, coking and nuclear fuel processing

sector jumped 103.4% year-on-year, up 89 percentage points from July, the NBS

said. Chemical product manufacturing profits rose 65% y/y, 38 percentage points

higher than in July.

     Out of 41 main industries, 39 saw profit growth in the first eight months

of year, the NBS said.

     From January to August, total industrial profits rose 21.6% to CNY4.92

trillion, accelerating from the 21.2% gain in the first seven months and sharply

higher than the 8.4% growth in the same period of last year.

     Income of industrial firms' main businesses rose 12.7% to CNY80.3 trillion

in the January to August period, compared with 13.1% growth in the first seven

months of the year, the NBS said.

     In the year to date, profits of state-owned enterprises rose 46.3% to

CNY1.08 trillion, compared with 44.2% growth in the first seven month of the

year.

     Share-issuing enterprise profits rose 23.3% y/y to CNY3.46 trillion,

compared with 22.9% increase from January to July.

     Profits among manufacturing firms rose 18.6% y/y to CNY4.32 trillion, up

from 18.1% in the first seven months.

     Mining sector profits were 5.9 times higher year-on-year in the first eight

months, rising to CNY324.9 billion, lower than the gain of 7.9 times in the

first seven months, but much higher than the 70.9% fall in the same period last

year. 

     Profits of the coal processing sector rose 9.6 times y/y from January to

August, compared with a surge of 13.7 times in the first seven months of the

year, the NBS said. Profits of the ferrous metal processing sector rose 1.1

times as of the end of August, compared with 100% growth from January to July,

due to a jump in steel prices.

     Power production industry profits decreased 22.6% y/y to CNY274.13 billion,

compared with a drop of 25.3% in the first seven months of the year.

     The government financial deleveraging campaign has had positive effects on

the debt-to-asset ratios of industrial companies, which fell 0.1 percentage

point to 55.7% by the end of August, He Ping said.

     The profit ratio saw growth of 6.42% year-on-year in August, up 0.75

percentage point from last August, He said. 

--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com

--MNI BEIJING Bureau; +1 202-371-2121; email: john.carter@mni-news.com

--MNI Beijing Bureau; +86 (10) 8532-5998; email: vince.morkri@marketnews.com

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