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April 17, 2018

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Central SOEs post steady rise in profit in Q1

CHINA’S centrally-administered state-owned enterprises posted steady profit growth in the first quarter bolstered by industrial upgrading, the State-owned Assets Supervision and Administration Commission said yesterday.

Profits for the SOEs jumped 20.9 percent from a year ago to 377.06 billion yuan (US$60 billion) in the first three months of the year, SASAC said, adding that March’s profits notched a record monthly high of 169.87 billion yuan.

The SOEs posted the best performance in 2017 over the past five years, with profits over the period rising 15.2 percent annually to 1.42 trillion yuan, according to SASAC.

Peng Huagang, a SASAC spokesman, attributed the profit growth to industrial upgrading and cost management.

The centrally-administered industrial SOEs posted a 26.7 percent annual surge in profits to 212.81 billion yuan in the first quarter — 5.8 percentage points above the average rate of central SOEs, Peng said.

The central SOEs saw a drop in their asset-liability ratio in the first quarter of this year due to deleveraging efforts.

The average asset-liability ratio for central SOEs stood at 65.9 percent by the end of March, down by 0.4 percentage points from the start of this year, according to SASAC.

The SOE sector has become a major target in the ongoing deleveraging drive to rein in mounting debt and guard against financial risks.

The government will continue to cut leverage and liability among central SOEs, said Peng.

More efforts will be made to dispose of non-performing assets and regulate open-book credit and inventory, high-risk businesses, debt investment and risks in other areas like international expansion, Peng pointed out.

Central SOEs are urged to expand equity financing via debt-equity swap and promote mixed-ownership and diversified equities, Peng said, adding this financing will be conducted in a market-oriented manner.

Meanwhile industrial profits contributed nearly 70 percent to the total profit growth — the largest driver of central SOEs’ performance, he added.

Both traditional industrial giants and advanced and emerging manufacturing companies are upgrading. Coal companies added 10 percent in fixed-asset investment compared with the same three-month period last year, while the automobile industry’s FAI surged 46.9 percent annually.

Steel makers gained from the continuing supply-side reform, which has cut domestic steel output capacity by 16 million tons. Central steel SOEs’ profits hiked 129.8 percent year on year to 6.9 billion yuan in the first quarter.


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