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Industrial Profit Growth has Stabilized with Some Acceleration

—— Interpretation of Jan. ~ Oct. 2016 profit data of industrial enterprises by Dr. He Ping of the Industry Department of National Bureau of Statistics

Submit Time:11-01-2017 | Zoom In | Zoom Out

Author: | Source:National Bureau of Statistics

Abstract:

The financial data of industrial enterprises published by National Bureau of Statistics on Nov. 27 showed that, in the period of Jan. to Oct., the profit of industrial enterprises above designated size grew by 8.6% on a year-on-year basis, a growth rate 0.2 percentage points higher than that of Jan. to Sept. In October, the profit increased by 9.8% over the same period of previous year, a growth rate 2.1 percentage points higher than that of Sept.  

I. The improving performance of enterprises was further stabilized 

In October, the profit growth accelerated, and the improving enterprise performance was further stabilized, specifically shown in the following aspects.  

The prices of industrial products increased continually. In October, the PPI rose by 1.2% on a year-on-year basis, with amplitude 1.1 percentage points higher than that of September. This showed further warming up of the market demand for industrial products in the country.  

The profit rate increase continually on a year-on-year basis. In October, the profit rate of main business income of industrial enterprises above designated size was 6.06%, an increase of 0.24 percentage points on a year-on-year basis.  

The financial cost decreased continually on a year-on-year basis. In October, the financial cost in enterprises decreased by 4.5% as compared with the same period of previous year, continuing the decreasing trend since the beginning of the year.  

 The growth rate of profit in mining industry set a new high. In October, the profit of mining industry increased by 86.6% over the same period of previous year, a growth rate 56.3 percentage points higher than that of Sept.  

II. Results of supply-side structural reform were demonstrated further 

The inventory kept on decreasing. At the end of October, the inventory of finished products in industrial enterprises above designated size decreased by 0.3% as compared with the same period of previous year, continuing the decreasing trend since the beginning of the year.  

The leverage ratio kept on decreasing. At the end of October, the asset-liability ratio of industrial enterprises was 56.1%, down by 0.7 percentage points on a year-on-year basis, and by 0.2 percentage points as compared with the previous month.  

The unit cost kept on decreasing. In October, the cost per 100 yuan primary operation income of industrial enterprises was 85.73 yuan, a decrease of 0.13 yuan on a year-on-year basis.  

III. Increase of profit growth rate was based on accelerated sales and increased prices  

The increase of growth rate of the profit of industrial enterprises in October as compared with that of September was mainly affected by the following:  

Accelerated growth of sales. In October, the main business income of industrial enterprises above designated size grew 5.4% over the same period of previous year, a growth rate 1.5 percentage points higher than that of September.  

Rising prices. According to preliminary estimation, in October, the main business income of enterprises increased by about 120.5 billion yuan due to the year-on-year increase of PPI by 1.2%, and the raw material cost of enterprises increased by about 59.7 billion yuan due to an increase of industrial producer purchasing price by 0.9%. After offsetting, the profit was increased by about 60.8 billion yuan, about 10.5 billion yuan more than that of September.  

Sectors of chemical industry, coal and general purpose equipment pulled up the growth substantially. In October, the chemical raw material and chemical product manufacturing sector increased profit of 8.14 billion yuan on a year-on-year basis, 5.52 billion yuan more than that of September; the coal mining and dressing sector increased profit of 16.56 billion yuan on a year-on-year basis, 5.61 billion yuan more than that of September; and the general purpose equipment manufacturing sector increased profit of 1.94 billion yuan on a year-on-year basis, as compared with a year-on-year decrease of 2.86 billion yuan in September. The total of these three sectors pulled up the profit growth rate of industrial enterprises above designated size by 2.7 percentage points.  

Although the industrial profit growth rate in October was stable with some increase, the profit growth structure was not quite rational: the profit grew fairly fast in the traditional raw material manufacturing sector, contributing more to the profit growth of the whole industry, but the profit growth rates in the high-tech manufacturing and equipment manufacturing sectors were somewhat slowed down. Furthermore, the profit growth depends excessively on price increase as a motive force. Therefore, industrial enterprises need more efforts to improve their internal capacity, to increase return by improving quality.  


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