Listed firms' earnings per share in first half drop 6.6pc on the mainland

PUBLISHED : Saturday, 01 September, 2012, 12:00am
UPDATED : Saturday, 01 September, 2012, 3:05am

Mainland-listed firms have taken a hammering from the economic slowdown, posting lacklustre earnings for the first half of this year and fuelling pessimism about the stock market outlook.

More than half of the public firms either posted losses or reported declining profits for the first six months. Average per-share earnings dropped 6.6 per cent from a year earlier, according to the official Shanghai Securities News.

Shrinking external and domestic demand coupled with rising material and labour costs dented manufacturing firms' profits in the first half, when the Chinese economy grew 7.8 per cent. its slowest pace in three years.

A total of 2,475 companies listed in Shanghai and Shenzhen published their interim earnings between July 1 and August 31.

Among them, 375 firms, or 14 per cent, showed losses, while 973 posted declines in profit.

"The poor corporate performance was in line with expectations," said analyst Liu Jun of Essence Securities.

The benchmark Shanghai Composite Index nudged down 5.06 points or 0.25 per cent to 2,047.52 yesterday. It has lost nearly 7 per cent so far this year, following a 21.7 per cent slump last year.

Steelmakers were the main victims of slowing growth in the first half, with five of them among the top 10 lossmakers.

According to Shanghai Securities News, the gross margin of the listed non-financial firms decreased 1.17 percentage points from a year earlier to 17.83 per cent.

The 16 mainland-listed banks eked out total profits of 545.2 billion yuan (HK$665.8 billion) in the January-June period, representing more than half the total earnings by the country's public companies.

Yet, mainland banks experienced a sharp decline in their earnings growth for the first half as demand for loans dropped amid the slowdown.

First-half profits at the listed banks climbed 18.3 per cent from a year earlier, while they reported a 34.3 per cent year-on-year jump for last year's first half.

China's regulators were striving to bolster the weak stock market, rolling out a series of measures to shore up investor confidence.Early this week, they decided to expand the trial programme of margin trading, likely to bring an additional 120 billion yuan of fresh capital into the market.

But analysts said the market downturn would continue, owing to worsening fundamentals.