Crisis finds state enterprise earnings declining 43.7pc in first two months

PUBLISHED : Wednesday, 25 March, 2009, 12:00am
UPDATED : Wednesday, 25 March, 2009, 12:00am

State-owned enterprises saw their total profits slump 43.7 per cent in the first two months from the same period last year to a combined 121.7 billion yuan (HK$138.11 billion) as the financial crisis deepened, the Ministry of Finance said.

The decline was bigger than the 0.4 per cent drop in the first two months of last year and a 25.2 per cent decrease for the whole year, according to the ministry.

Revenue at state-owned companies totalled 2.7 trillion yuan in January and February, down 8.1 per cent, the first decline in 'many years', it said. 'The impact of the global financial crisis on the nation's companies is deepening.'

State companies under the central government recorded a 33.3 per cent decline in net profits to 106 billion yuan in the two-month period, while earnings at those under provincial governments slumped 72.5 per cent to 15.8 billion yuan.

The electricity, transport, steel and non-ferrous industries recorded a net loss on shrinking demand. Profit at the oil and vehicle industries largely declined, while coal was the only industry to record profit growth, although the pace abated, the ministry said.

Over the past two months, the central government has announced stimulus packages for 10 strategic industries, including textiles, vehicles, shipbuilding, electronics and information technology, light industry, petrochemical, heavy machinery, non-ferrous metals and steel, and logistics.

The packages came after a 4 trillion yuan investment expansion plan to boost the economy announced in November.

State-owned enterprises have posted falling profits for five consecutive months since the second half of last year, leading to a drop in revenue for the government.

Finance ministry figures showed that tax paid by the companies under the central government dropped 4.8 per cent to 234.9 billion yuan in the first two months, while tax paid by corporations under provincial governments fell 14.2 per cent to 69.8 billion yuan.

Inventory ratios at state companies increased 17.2 per cent in the first two months and their debt-to-asset ratio rose 1.1 points to 57.7 per cent.

The State-owned Assets Supervision and Administration Commission in January asked state companies with high debt burdens, tight cash flows and poor cost management records to improve risk and cost management.

Negative trend

State-owned enterprises have posted falling profits for five months

Revenue at the state firms in January and February amounted to, in yuan: yuan2.7tr