Vice-chairman confident increase in production levels will offset bottom-line impact from rising raw materials prices
High steel prices will continue to pressure Harbin Power Equipment's profitability this year, although increased production levels will mitigate the impact on its bottom line, according to vice-chairman Zhao Kefei.
Raw materials account for up to 75 per cent of operating costs at the H-share company, one of the mainland's largest makers of coal-fired and hydropower plant boilers, generators and turbines.
Last year, prices for steel used by the company surged between 20 per cent and 50 per cent, according to deputy general manager Yao Jinglong. The average price of steel products surged more than 30 per cent year on year in this year's first quarter, according to state media.
'Raw material prices will have a fairly big impact on our costs,' Mr Yao said. 'We will strive to lower material costs by improving product design.'
The company yesterday posted a 41.86 per cent rise in net profit last year to 53.47 million yuan, as turnover rose 34.62 per cent to 5.14 billion yuan.
The profit figures were boosted in part by a 24.34 million yuan decline in interest expenses as the firm retired a portion of its short-term debt, and a 16.71 million yuan increase in research subsidies.