Profits rebound for major industrial firms

China's major industrial firms posted a recovery in profits year on year in July, reversing the decline in June, while the drop in the period from January to July was less than that in the first half of the year.

Profits of companies with an annual revenue of more than 20 million yuan (US$2.8 million) rebounded 2.6 percent from a year earlier last month to 512.67 billion yuan, data from the National Bureau of Statistics showed.

In comparison, industrial profits in June declined 3.1 percent from the same period last year.

Between January and July, the accumulated profits dropped 1.7 percent year on year.

Taking into account factors such as adjustments to the statistical system, enhanced enforcement of statistics, elimination of duplicate data, reforms of enterprises, and the fourth national economic census, the decline in January-July narrowed by 0.7 percentage points from the first six months, the bureau said.

The rebounding profit growth was mainly led by faster rises in the petroleum and chemical industries, the electrical machinery sector and automobile firms, said Zhu Hong, a senior statistician at the bureau.

Oil-processing industry profits fell 28.1 percent year on year, but the drop was 49.3 percentage points less than June as a result of asset disposal gains and lower crude oil prices. 

Profits in the electrical machinery sector increased 30.8 percent, 26.6 percentage points faster than June, on the back of a pickup in sales and a low base in the same period last year. 

The chemical industry posted profits rising 3.2 percent, reversing a 14.7 percent fall in June, with a sharp rise in investment income. 

Auto firms' profits fell 9.2 percent from a year earlier but rebounded compared with the 16.2 percent decline in the previous month.

Zhu also highlighted accelerating profit growth in the consumer product manufacturing industry. The sector posted profits soaring 10 percent year on year, 7.4 percentage points faster than the headline industrial profit growth, and 6.1 percentage points faster than June.

Food makers’ profits surged 21.5 percent, reversing the 4.9 percent decline in June, while the agricultural and sideline food-processing industry gained profits up 25.4 percent from a year earlier, 18.6 percentage points faster than June.

Private companies saw sharp gains in profits, which rose 11.4 percent in July from a year earlier, 9.7 percentage points faster than June.

The leverage ratio continued to fall, with the debt-to-asset ratio of major industrial enterprises down 0.5 percentage points from a year earlier to 56.8 percent at the end of July, among which the ratio for state-owned enterprises was 58.3 percent, 1.1 percentage points lower than the same period last year.