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Sunday 28 December 2008
Mainland Profit Growth Slows Sharply
The economic slowdown in the mainland cast a damper on companies’ bottom lines on Friday as official data registered a sharp deceleration in profit growth.
The economic slowdown in the mainland cast a damper on companies’ bottom lines on Friday as official data registered a sharp deceleration in profit growth.
Mainland industrial firms earned a combined 2.4 trillion yuan (HK$2.7 trillion) in profits in January through November, up 4.9 per cent from a year earlier, the National Bureau of Statistic said on Friday.
The figure was well down from annual growth of 19.4 per cent in the first eight months of the year.
Xing Ziqiang, an economist at China International Capital Corp in Beijing, said the deterioration was more pronounced than expected and could be a harbinger of worse to come. He calculated that profits in the September-November period fell 26.4 per cent from a year earlier, describing it as a “hard landing”.
“We forecast that the economic slide and deflation will continue to hit industrial profits next year,” Mr. Xing said in a note to clients.
State-owned firms, many of which are in heavy industrial sectors that have borne the brunt of the country’s construction slowdown, performed the worst. Their profits declined by 14.5 per cent in the January-November period from a year earlier.
Fortunes also soured for foreign-invested firms, which saw profits fall 3.1 per cent after recording a 14.3 per cent rise in the first eight months of the year.
Yi Gang, deputy central bank governor, said on Friday that he expected companies to complete their destocking of backed-up inventory in the first half of next year, at which point industrial profitability would begin to recover.
Mainland’s companies raked in huge profits as the economy grew at a double-digit pace over the past five years. But the country is on track for single-digit expansion this year and could slow to as little as 5 per cent growth next year according to some forecasts.
Among the different industrial sectors, power companies fared particularly poorly after the government prevented them from passing on higher global energy prices to consumers over the past year. Their profits were down 84.1 per cent.
It was unclear whether the bad news had spread to all tiers of the private sector, because the industrial profit data only covers firms with annual sales of more than five million yuan.
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Mainland Profit Growth Slows Sharply
Reuters in Beijing
26 December 2008
The economic slowdown in the mainland cast a damper on companies’ bottom lines on Friday as official data registered a sharp deceleration in profit growth.
Mainland industrial firms earned a combined 2.4 trillion yuan (HK$2.7 trillion) in profits in January through November, up 4.9 per cent from a year earlier, the National Bureau of Statistic said on Friday.
The figure was well down from annual growth of 19.4 per cent in the first eight months of the year.
Xing Ziqiang, an economist at China International Capital Corp in Beijing, said the deterioration was more pronounced than expected and could be a harbinger of worse to come. He calculated that profits in the September-November period fell 26.4 per cent from a year earlier, describing it as a “hard landing”.
“We forecast that the economic slide and deflation will continue to hit industrial profits next year,” Mr. Xing said in a note to clients.
State-owned firms, many of which are in heavy industrial sectors that have borne the brunt of the country’s construction slowdown, performed the worst. Their profits declined by 14.5 per cent in the January-November period from a year earlier.
Fortunes also soured for foreign-invested firms, which saw profits fall 3.1 per cent after recording a 14.3 per cent rise in the first eight months of the year.
Yi Gang, deputy central bank governor, said on Friday that he expected companies to complete their destocking of backed-up inventory in the first half of next year, at which point industrial profitability would begin to recover.
Mainland’s companies raked in huge profits as the economy grew at a double-digit pace over the past five years. But the country is on track for single-digit expansion this year and could slow to as little as 5 per cent growth next year according to some forecasts.
Among the different industrial sectors, power companies fared particularly poorly after the government prevented them from passing on higher global energy prices to consumers over the past year. Their profits were down 84.1 per cent.
It was unclear whether the bad news had spread to all tiers of the private sector, because the industrial profit data only covers firms with annual sales of more than five million yuan.
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