State firms report 24pc rise in profit

PUBLISHED : Friday, 20 May, 2011, 12:00am
UPDATED : Friday, 20 May, 2011, 12:00am


The profits of the mainland's state-owned enterprises rose 24.2 per cent during the first four months of 2011, compared with the year earlier period, according to the Ministry of Finance.

Firms owned or controlled by Beijing and local governments reported a combined net profit of 712.59 billion yuan (HK$850.49 billion), up from 573.74 billion yuan a year earlier. Revenues rose 24 per cent to 11.12 trillion yuan.

The profit growth rate slowed from 27.5 per cent in the year's first quarter, and 29.4 per cent in the year's first two months.

Enterprises directly controlled by the central government reported a total profit of 501.25 billion yuan in the four months, up 21.5 per cent year on year, while local government-administered companies booked a 31.2 per cent rise in profit to 211.34 billion yuan.

Sectors that saw the fastest profit growth included construction materials, light industries, chemicals, non-ferrous metals and crude oil, the ministry said in a statement, without giving profits by sectors.

Construction materials makers benefited from higher cement prices as Beijing boosted construction of low-cost housing to address the short supply.

Chemicals, non-ferrous metals and crude oil producers enjoyed significant profit gains on the back of soaring metal, petroleum and petrochemical prices, which grew faster than company operating costs.

However, on a month-on-month basis, the property construction and steel production sectors saw lower profits last month, while the power generation sector continued to report losses, the ministry said.

According to the China Electricity Council, which represents the generators, the mainland's five national state-owned power generating groups posted a combined loss of 10.57 billion yuan in the first four months, up from a loss of 3.28 billion yuan in the same period last year.

The council blamed higher coal prices and Beijing's freeze on power prices for the widened losses.

The council warned that the nation might suffer from a maximum power shortage of 40 gigawatts (GW) of generation capacity, or 4.2 per cent of the national installed total.

It could rise to 50GW next year and 70GW in 2013, it said, if Beijing failed to raise power prices to keep up with rising coal cost.

'The real reason for the power shortage is not insufficient generating capacity, but rather the distorted power price regime,' the deputy director of the State Electricity Regulatory Commission's general office was quoted by mainland media as saying on Tuesday.

According to China Electricity Council's data, the nation's power production rose 12.6 per cent year on year in the first four months. Installed generating capacity rose 11 per cent. The average coal-fired plant's utilisation edged up 1.17 per cent to 1,734 hours.

The state-backed Bohai Rim Steam-Coal Price Index, which covers spot market prices at six major coal shipping ports in northern China, rose 7.8 per cent in the past two months to an average of 827 yuan a tonne in the week to Tuesday, according to Dow Jones.