Profits of state-owned firms plunge in 2008

15:04, October 12, 2009      

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The profits of state-owned companies in eight of nine industries were down in 2008, with the trade and commerce industry seeing a slight increase, according to a report issued over the weekend.

The State-owned Supervision and Administration Commission of the State Council (SASAC) released the data, which revealed that the profits of state-owned airline companies took a major hit year-on-year. Three major airline companies, including Air China, lost 28.22 billion yuan (4.13 billion U.S. dollars) in 2008, with profits dropping 37.93 billion yuan (5.56 billion U.S. dollars) from the previous year.

High oil prices and the financial crisis were the major causes of the profit losses, according to the report.

But "the state-owned airline companies began to perform better in March this year," Zhang Qihuai, a lawyer who has dealt with several aviation cases, told the Global Times Sunday.

"And the chairman of China Eastern told me recently that they were already in the black at present. Air China also performed better than the previous year," he said. "There are still several holidays coming up this year, so the airline industry will not perform badly."

The profits of State-owned power utilities, including China Huaneng Group, dropped considerably among all industries. Their profits were 1.93 billion yuan (282.77 million dollars) in 2008, much lower than the profits of the previous year.

The high price of coal and other resources is the major cause of the decline in profits, according to the report.

But the profits of all power utilities in the first eight months of 2009 increased 158.6 percent over the same period of 2008, the quickest increasing pace among all the industries, according to the National Bureau of Statistics.

The profits of state-owned iron and steel companies including Baosteel Group dropped 37.3 percent from the previous year to 36.69 billion yuan (5.38 billion dollars) in 2008, according to SASAC.

"The iron and steel companies lost a lot in the fourth quarter of 2008 because of high production cost and overcapacity," Wang Zhe, an analyst at the China Securities Research, told the Global Times Sunday.

"They did much better in the third quarter this year, but we predict their profits will still decline this year as a whole compared with 2008," he said.

The profits of trade and commerce companies increased 1.6 percent over the previous year to 37.5 billion yuan (5.49 billion dollars) in 2008, because most of them decreased their investments and lowered production costs in 2008, the report said.

Source: Global Times

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