Business / Economy

Costs hit corporate profit growth in May

By LAN LAN and LI JIABAO (China Daily) Updated: 2014-06-28 06:50

Costs hit corporate profit growth in May

A worker helps assemble a car at an auto plant in Qingzhou, Shandong province. Vehicle manufacturing recorded 29.6 percent profit growth so far this year through May, according to official statistics. Provided to China Daily

But refining sector, vehicles among bright spots of economy

Profit growth at major Chinese industrial companies decelerated in May because of sluggish business, higher inventories and rapidly increasing costs, said analysts.

The year-on-year growth rate of 9.8 percent for the first five months was down slightly from the 10 percent pace for the first four months, the National Bureau of Statistics said on Friday.

He Ping, an analyst at the NBS, said slower growth in the electronics, coal and general equipment industries depressed the overall rate.

Costs hit corporate profit growth in May
Jan-April industrial added value up 8.7%
Costs hit corporate profit growth in May
Industrial profit growth slows
In May, revenues from industrial companies' core businesses rose 6.9 percent year-on-year, down 2.8 percentage points from April.

Hao Daming, an analyst with Huarong Securities Co Ltd, said the slower growth was partly caused by rising interest expenses and other financial costs.

Interest expenses increased 10.4 percent and financial costs soared 17.4 percent in the first five months, compared with 9.5 percent and 15.8 percent for the first four months.

"The rising costs have squeezed companies' profits. They also reflected companies' difficulty in raising capital," Hao said.

Major companies' finished goods inventory rose 12.5 percent to 3.5 trillion yuan ($564 billion) in May, which ate into their profits.

In May, profits of industrial companies rose 8.9 percent year-on-year to 512.7 billion yuan, down from 9.6 percent in April.

Profits of State-owned enterprises increased 3.4 percent from January to May, while profits for private companies rose 12.9 percent.

Among the 41 industries surveyed, 32 registered profit growth in the first five months, while eight saw their profits decline.

The coal mining and processing industries recorded a 43.9 percent profit decline in the first five months.

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