Angang Steel, the largest Hong Kong-listed mainland steel producer, beat its own profit forecast as earnings rose sharply last year, thanks to higher product prices and its acquisition of its parent firm's assets.
Net profit rose to 7.09 billion yuan by international accounting standards, up 236.2 per cent from 2.11 billion yuan in 2005 and 8.6 per cent ahead of the 6.53 billion yuan mean estimate of 21 analysts polled by Thomson First Call.
The company forecast 6.12 billion yuan profit in a circular to shareholders in February last year that gave details of the acquisition of 19.69 billion yuan of steel production assets from its parent, Anshan Iron and Steel Group, the mainland's second-largest steelmaker.
Second-half net profit grew 347 per cent to 3.98 billion yuan, as a new cold-rolled steel sheet plant came into operation in June.
Turnover surged 106.1 per cent to 54.59 billion yuan last year, by mainland accounting standards, after Angang started booking contributions from the assets it acquired in January.
The acquisitions helped crude steel output jump 348.7 per cent to 15.16 million tonnes and steel products output rise 131.9 per cent to 14.02 million tonnes.
Overall operating margin rose to 17.5 per cent from 11.2 per cent in 2005, as the acquired assets commanded higher margins, and cost savings were made from streamlining operations after the acquisitions.