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Profit decline narrows in March
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PROFITS of China's industrial companies dropped 0.4 percent from a year earlier in March, better than the fall of 4.2 percent in the first two months, the National Bureau of Statistics said today.
Cheaper raw materials, improved investment returns and recoveries in the energy sector helped to narrow the profit decline, a bureau analyst said, but he warned challenges are still ahead for manufacturing companies.
Total profits were 508.6 billion yuan (US$82 billion) in March, landing net earnings in the first quarter at 1.25 trillion yuan, down 2.7 percent from a year earlier. Among the 41 industries being tracked, 30 delivered more profits, the official data showed.
He Ping, a researcher at the bureau, said lower price of raw materials helped to make room for more profits, while the recent cut of interest rate also reduced the operational costs for industrial producers.
"The recoveries in the energy sector is another important source for better profits," He said. "Albeit some improvements, the conditions are still severe due to weak demand...Poor sales have added pressures on inventory, while it in turn makes cash flow slow."
Earlier Data showed China's manufacturing sector may deteriorate again in April as a survey index fell to a one-year low.
The HSBC Flash China Manufacturing Purchasing Managers' Index, the earliest available indicator of the operating conditions at industrial companies, dropped to 49.2 in April from the final reading of 49.6 in March, indicating contracted activity in manufacturing.
State-owned enterprises were the worst performer, which reported their net earnings lost 29.3 percent year on year in the first quarter, while profits of private companies rose 6.8 percent and that of overseas-invested firms rose 6.2 percent.
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