Low product prices and inflated costs have taken a toll on China's Maanshan Iron and Steel Co (Magang), which says profit shrank 12.5 per cent to 35 million yuan (about HK$32.55 million) in the six months to June.
This was despite a 7.1 per cent rise in turnover to 3.3 billion yuan.
The company claimed success in cutting accounts receivables, down to 982 million yuan at the end of June from 1.19 billion yuan at the start of the year.
Chairman Hang Yongyi said: 'Our margins were mainly eroded by the rising cost of upstream products used in our production processes.' The cost of fuel, electricity and transport rose in the first half, while overall product prices fell. The adverse impact was partially offset by increased sales volume.
The company also suffered from an increase in costs of 23 million yuan due to squeezed profitability of its export sales, amounting to US$41.23 million in the first half, after Beijing cut rebates on export value-added tax in January.
At the operating level, Magang's margin was a meagre 1.7 per cent in the first half, slightly down from 1.9 per cent a year ago.
