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Industrial Profit Continues Its Momentum for Fast Growth

Submit Time:30-07-2018 | Zoom In | Zoom Out

Author: | Source:National Bureau of Statistics

Abstract:

The financial data released by the National Bureau of Statistics on June 27 show that profits of industrial enterprises above the designated scale grew by 16.5% on a year-on-year basis from January to May 2018, an increase of 1.5 percentage points over the period from January to April, 2018. The growth rate in May stood at 21.1%, down 0.8 percentage point over April. It indicates that enterprises maintained their momentum for fast growth.  

I. The supply-side structural reform continued to take effect.  

First, cost went down. From January to May, the cost expense per RMB 100 of principal business income of industrial enterprises above the designated scale was RMB 92.59 (down RMB 0.35 over the same period of last year), of which, the cost per RMB 100 of principal business income registered RMB 84.49, a decrease of RMB 0.31 year on year. Second, the leverage ratio lowered. By the end of this May, the liability-to-asset ratio of industrial enterprises above the designated scale dropped by 0.6 percentage point to 56.6% over the same period of last year. Of these, the liability-to-asset ratio of state-controlled enterprises reported 59.5%, down by 1.5 percentage points year on year. This signals that de-leveraging drive has achieved more remarkable progress at these enterprises.  

II. Industrial enterprises saw their overall benefits improved continuously on the whole.  

Firstly, finished goods saw their inventory turnover speeding up. As at the end of May, the inventories of finished goods produced by industrial enterprises above the designated scale needed 16.6 days to turn into cash. The duration was shortened by 0.2 day year on year. Second, profitability improved obviously. From January to May, the principal business revenue of industrial enterprises above the designated scale grew at the rate of 6.36%, up 0.35 percentage point year on year.  

III. Profit increase was mainly attributed to such raw materials processing and consuming industries as steel, construction materials and chemicals.  

The industries that made relatively large contributions to the profit increases from January to May mainly include: ferrous metal smelting and rolling, non-metal mine products, chemical raw material and chemical products, oil and natural gas extraction, and electricity & heating production and supply. The industries generated a profit growth rate of 110%, 44.6%, 27.7%, 260% and 27.8%, respectively. Their profit increases combined accounted for nearly 70% of those generated by all industrial enterprises above the designated scale nationwide.  

IV. Price hikes and cost cuts helped profit increase fast this May.  

Although industrial profit growth rate in May fell back somewhat over April, it was still a fast rate. The rapid increase was credited to both cost cuts and price hikes. In May, the producer price index (PPI) rose by 4.1% on a year-on-year basis, up 0.7 percentage points over the previous month; the purchasing price index increased by 4.3% over year on year, up 0.6 percentage point over the prior month. According to the preliminary estimation, the contribution to profit increase by price movement in May went up by 4.3 percentage points over April.  


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