MNI 5 Things: China June IP Slowed But Continued Rapid Growth

     BEIJING (MNI) - Profit growth of Chinese industrial companies softened in

June as the monthly rise in input prices outpaced that of output prices to push

up production costs, the National Bureau of Statistics (NBS) showed Friday.

Companies included in the NBS study had over CNY20 million in annual revenue

from their main business activities.

     The key points from the latest NBS data:

     - Industrial profits for June rose by 20.0% y/y to CNY658.29 billion,

following the rapid growth rate of 21.1% y/y in May. Price changes dragged up

profits by 0.3 percentage points from the previous month, compared with a 4.3

percentage points contribution in May.

     -Combined profits made by China's industrial companies in January-June rose

17.2% from a year ago to CNY3.39 trillion. That compared with an increase of

16.5% y/y in Jan-May, and was the highest increase so far in 2018. The NBS

attributed the growth to lower production costs and better operating efficiency.

     -Production costs fell in H1. Every CNY100 of income generated by an

industrial firm's primary business cost CNY84.42. Overall operating efficiency

was enhanced at the same time, with profit margins rising 0.41 percentage points

to 6.51%.

     - In the year to date, state-owned enterprise profits rose 31.5%

year-on-year to CNY1.03 trillion, compared with 28.7% growth in the first 5

months of the year. Listed companies' profits rose 21% year-on-year to CNY2.41

trillion, compared with 20.6% growth in the first 5 months. However, the

leverage ratio of industrial firms printed 59.6% in H1 from 56.6% in Jan-May.

     -Out of the 41 main industrial sectors, 29 saw profit growth in H1,

compared with 31 in the period from Jan to May, the NBS said. The NBS singled

out five sectors whose profits contributed 67% of total industrial profit

growth, including ferrous metal processing, chemical materials and products

manufacturing, petroleum and natural gas extraction, non-mental mineral

producing and electricity, thermal producing and supplying.

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

--MNI Singapore Bureau; +65 8233 2326; email: Asia-Editor@marketnews.com

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