China Sees Drop in Industrial Firms' Profits

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Last updated at: (Beijing Time) Thursday, April 25, 2002

China Sees Drop in Industrial Firms' Profits

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China's industrial companies reported a decrease in profits in the first quarter of this year, influenced by the drop in the international petroleum prices, the National Bureau of Statistics (NBS) said in Beiing on Wednesday.

The NBS said that the composite index measuring the efficiency of industrial companies dropped 0.6 points year on year to 112.7 in the first three months of 2002.

The pre-tax profits of the industrial companies totaled 79.92 billion yuan (9.66 billion U.S. dollars) in the January-March period, down 9.1 percentage points from that of the same period last year. The first two months' profits dropped 11.3 percent year on year, although the figure for March dropped merely slightly.

According to the NBS report, the petroleum exploitation and processing industry suffered a fall of 59.3 percent in profits, with the loss totaling 15.93 billion yuan (1.92 billion U. S. dollars).

During the first three months, State-owned firms saw a profit drop of 33.71 billion yuan (4.08 billion U.S dollars), or 30.1 per cent.

The NBS also said that 26 industries of the total 40 industrial sectors maintained a hefty growth in profits, such as coal, paper making, tobacco, medicine and machinery.

Experts attributed the profit drop to the fluctuating petroleum prices and over-productivity in some industries, holding that the overall industrial efficiency was dragged down by the decline in five major sectors.

Statistics reveals that in the first quarter, among the 14 key industrial sectors, 9 sectors including coal, building materials, machinery and light industries, boosted profits, surging nearly 6 billion yuan (725.51 million U.S dollars), while the other five - petroleum, metallurgy, nonferrous metal, electronics and textiles - suffered a profit plummet of 11.4 billion yuan (1.38 billion U.S dollars).

Experts said in the first two months of this year, the international petroleum prices dropped by six U.S. dollars a barrel year on year, down 23.9 percent.

Generally, China 's petroleum sector will lose 5 to 6 billion yuan (604.59 - 725.51 million U.S dollars) for every one-dollar drop in the international petroleum prices.

With the recent rise in the international petroleum prices and the weakening influence of factors dampening industrial profits, experts say the decline will come to a halt and China's industrial firms are likely to see their profitability shooting back in the next quarter.

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