China NBS: Slower July Industry Profit Growth Due Hot Weather

     BEIJING (MNI) - Chinese industrial companies saw profit growth slow in July

due to hotter-than-usual weather, the National Bureau of Statistics (NBS) said

Sunday, noting that the profit growth rate was still strong.

     The combined profits of Chinese industrial firms rose 16.5% year-on-year to

CNY612.67 billion in July, down 2.6 percentage points from the 19.1% y/y growth

rate in June, but much higher than a rise of 11% last July, the NBS said. 

     The NBS attributed the fall to hot weather. "The slowdown is caused by a

non-economic reason -- some companies suspended production due to hot weather,"

said He Ping, an economist at the NBS. "Industrial profits growth remained at a

high rate as supply-side reforms continue to make process." 

     Out of 41 main industries, 37 saw profit growth in the first seven month of

year, the NBS said.

     Overall costs for industrial firms fell modestly in July, He said. The cost

of every CNY100 of income generated by an industrial firm's primary business

stood at CNY93.12, CNY0.29 lower than last July, He said.

     The destocking of finished products continued. As of the end of July,

inventories of industrial companies grew 8% y/y, 2.1 percentage points lower

than the growth rate of main business income.

     For the first seven months of this year, total industrial profits rose

21.2% to CNY4.25 trillion, lower than the 22% gain in the first six months but

sharply higher than 6.9% growth in the same period of last year.

     Income of industrial firms' main businesses rose 13.1% to CNY69.8 trillion

in the period from January to July, compared with a 13.6% growth in the first

half of the year, the NBS said.

     Profits of state-owned enterprises rose 34.2% in July, 13.5 percentage

points higher than in June due to the recovery of oil, coal and steel sectors,

He said.  Year-to-date, state-owned enterprise profits rose 44.2% y/y to

CNY9.274 trillion, compared with 45.8% growth in the first half of the year.

     Share-issuing enterprise profits rose 22.9% y/y to CNY2.991 trillion,

compared with 23.6% increase in the first half of the year.

     Profits among manufacturing firms rose 18.1% y/y to CNY3.74 trillion

year-to-date, down from 18.5% in the first six months, but up from 12.8% from

January to July last year. 

     Mining sector profits were 7.9 times higher year-on-year in the first seven

months, rising to CNY2.80 trillion, lower than the gain of 13.4 times in the

first six months, but much higher than the 77% fall in the same period last

year. 

     Profits of the coal processing sector rose 13.7 times y/y from January to

July, compared with a 19.7 time surge in the first half of the year, the NBS

said. Profits of the ferrous metal processing sector rose 100% as of the end of

June, compared with 96.4% growth from January to June, due to the surge in steel

prices.

     Power production industry profits decreased 25.3% y/y to CNY2.273 trillion,

compared with a drop of 28.2% in the first half of the year.

     The deleveraging campaign has had positive effects on the debt-to-asset

ratios of industrial companies, which fell 0.7 percentage point to 55.8% by the

end of June this year, He Ping 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

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