SOEs post smaller profit drop of 32.3%

By Winny Wang | May 21, 2009, Thursday |

Print Edition

STATE-OWNED enterprises earned 32.3 percent less in the first four months than a year earlier.

The drop was smaller than a 36.8-percent decline in the first quarter, indicating the stimulus package and a reduction of high stockpiles were having the intended effect.

The combined profit of 115,000 SOEs totaled 323.64 billion yuan (US$47 billion) in the four months, the Ministry of Finance said yesterday.

Revenue for these companies dropped 7.3 percent to 5.98 trillion yuan in the period, compared with a 7.6-percent decline in the first quarter, the ministry said.

Some analysts said the slower declines indicated that the reduction of high stock piles and the 4-trillion-yuan stimulus package have helped. But they cautioned that it's still uncertain whether the trend will last as demand hasn't recovered.

"State-owned enterprises showed signs of recovery due to the country's stimulus package, but revenue and profit still declined, and they face a tough situation for some time," said Huang Xiangbin, an analyst at Cinda Securities Co.

Among these companies, 137 centrally administered SOEs posted a 37-percent drop in profit to 171.37 billion yuan. Profit decreased 52 percent to 63.61 billion yuan at locally administrated SOEs in the period.

Steel and shipping companies posted a loss in the period, while cigarette and real estate companies reported profit increases, the ministry said.

Besides the stimulus package announced in November, China has granted support in 10 key industries to achieve its economic growth target of 8 percent this year.

Economy

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SOEs post smaller profit drop of 32.3%

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