MNI: China October Industrial Profits Ease, But Still Strong

     BEIJING (MNI) - Profit growth of Chinese industrial companies maintained

strong momentum in October on lower costs and improved operating efficiency, the

National Bureau of Statistics (NBS) said Monday.

     The combined profits of industrial firms rose 25.1% year-on-year to

CNY745.41 billion in October, the second-strongest monthly growth this year

behind the 27.7% y/y growth rate seen in September, which was the strongest

growth since data on industrial profits became available in February 2012.

     From January to October, total industrial profits rose 23.3% to CNY6.25

trillion, accelerating from the 22.8% gain in the first nine months and sharply

higher than the 8.6% growth in the same period of last year.

     He Ping, an NBS economist, attributed the profit increase in the first 10

months to lower costs, with every CNY100 of income generated by an industrial

firm's primary business costing CNY85.46, or CNY0.26 lower on an annualized

basis compared with the first nine months of this year, He said.

     The increase of industrial companies' primary business income also

contributed to profit growth. 

     "Operating efficiency continued to rise as the companies' primary business

income out of every CNY100 assets was CNY112.1, CNY4.6 higher than in the

January-October period last year," he said. 

     Income of industrial firms' main businesses rose 12.4% to CNY100.1 trillion

in the January-October period, compared with 12.5% growth in the first nine

months of the year, the NBS said.

     He singled out four sectors whose newly added profits contributed 51.2% of

total industrial profit growth to CNY603.4 billion in the first 10 months of the

year, including coal mining and washing, ferrous metal processing, chemical

materials and products manufacturing, and petroleum and natural gas extracting

     Out of the 41 main industrial sectors, 38 saw profit growth in the first 10

months of the year, the NBS said.

     In the year to date, state-owned enterprise profits rose 48.7% y/y to

CNY1.41 trillion, compared with 47.6% growth in the first nine months of the

year.

     Profits of share-issuing enterprises rose 25.3% y/y to CNY4.37 trillion,

compared with 24.6% growth in the first nine months of the year. Profits of

manufacturing firms rose 20.1% y/y to CNY5.48 trillion, compared with 19.6%

growth in the first nine months of the year.

     Mining sector profits rose 4.1 times to CNY411.16 billion, compared with a

growth rate of 4.7 times in the January-September period.

     Profits of the coal processing sector rose 6.3 times y/y from January to

October, compared with an increase of 7.2 times in the first nine months of the

year, the NBS said. Profits of the ferrous metal processing sector rose 1.6

times as of the end of October, compared with 1.2 times growth from January to

September.

     Power production industry profits fell 16.3% y/y to CNY349.14 billion,

compared with an 18.3% decrease in the first nine months of the year.

     "The leverage ratio and operating risks of companies continued to drop," He

Ping said, adding that the debt-to-asset ratio fell 0.5 percentage point to

55.7% by the end of October.

     The profit ratio was 6.24% year-on-year in October, up 0.55 percentage

point from the January-October period last year, the NBS said. 

     High-tech manufacturing saw rapid growth. In the first 10 months, the

income of the main businesses in the high-tech manufacturing sector grew 13.6%,

1.2 percentage points higher than the total income of industrial firms' main

business, He said. 

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

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

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