Recoveries in profit growth of industrial sectors

According to data released by the National Bureau of Statistics of China, the profit growth of enterprises above designated size has continued the upward trend seen in the fourth quarter of last year. In the first two months of 2013, enterprises above designated size had a net income 70.92 billion yuan, a 17.2 percent increase year on year and10.39 billion yuan more than the same period in the previous year. State-owned enterprises made 21.25 billion yuan in profit, 3.38 billion yuan more that last year, a 18.9 percent increase year on year.

The main contributor to the higher profit growth rate in January and February was the relatively low comparison basis (the profit growth rate was -5.2 percent in the previous year). Compared to the same period of 2011, above designated size enterprises in the industrial sector have seen 11.1 percent growth and 5.4 percent growth on a two years average, of which state-owned enterprises in the industrial sector experienced a drop of 4.5 percent in profit growth, a 2.3 percent decrease on two years average.

Six industries contribution to profit growth.[Photo/chinadaily.com.cn]

The following six industries drove the profit up by 103.9 billion yuan in the first two months.

1. The power industry was top of the list, with 46 billion yuan in profit, 27.5 billion yuan or 1.5 times higher than last year, which represents 26.5 percent of the 103.9 billion yuan profit growth and 4.6 percent of the total 17.2 percent profit growth rate. The huge drop in coal price led to lower costs in electricity generation, and the regional adjustment of the electricity pricing structure pushed up electricity prices in some areas. 　 2. The oil refinery industry recorded a 10.1 billion yuan loss when compared with the the same period last year, and the first two months of 2013 saw the oil refinery industry make 5.7 billion yuan in profit. Effectively, the oil refinery industry made 15.8 billion yuan more than same period last year, which represents 15.2 percent of the 103.9 billion yuan in newly made profit, 2.6 percent of the total 17.2 percent profit growth. The main reason the oil refinery industry has been turning profit is because of the crude oil price fall last year.

3. The iron and steel industry made a profit of 14.6 billion yuan, 13.8 billion or 17 times more than the first two months of last year. It contributed to 13.3 percent of profit growth, 2.3 percent of the total 17.2 percent growth rate. A low comparison basis and drop in price of iron ore are the main reasons of the growth.

4. The electronic industry made 23.5 billion yuan, 11.1 billion yuan or 89 percent more than that last year. The profit growth represents 10.7 percent of total profit growth and pushed the growth rate up 1.8 percent. Two reasons that caused the profit surge in the industry include the relatively low comparison basis and the growing market for flat monitors, tablet computers and mobile communication devices.

5. The automobile industry realized 61.2 billion yuan in profit, 19.8 percent or 10.1 billion yuan more than last year, representing 9.7 percent of total profit growth, and contributing 1.7 percent to the profit growth rate. Strong demand and restructuring of products are the reasons for the growth.

6. The tobacco industry made 33.1 billion yuan in profit, 21.3 percent or 5.8 billion yuan more than last year, representing 5.6 percent of profit growth and 1 percent of the profit growth rate. Steady demand and growing sales are the reasons for the profit growth.

Six industries accounted for over 80 percent of total profit growth in the first two months of 2013, of which the power, oil refinery and steel industries contributed to over 50 percent of the growth. In conclusion, industrial output has been generally stable, and the primary contributors of the growth in profit were lower comparison bases and falling raw material costs.