BEIJING (Reuters) - Profits earned by Chinese industrial companies fell 4.6 percent in October from a year earlier, declining for the fifth consecutive month as the world’s second-largest economy slows and industries deal with overcapacity.
Industrial profits - which cover large enterprises with annual revenue of more than 20 million yuan ($3.13 million) from their main operations - fell 2.0 percent in the first 10 months of the year compared with the same period a year earlier, the National Bureau of Statistics (NBS) said on its website Friday.
In September, profits fell 0.1 percent from a year earlier.
The impact of foreign exchange and lower investment income on companies’ profits were less pronounced in October than in prior months, the statistics bureau said in a statement.
Falling sales, rising costs and hits to profit in the oil, steel and coal industries all contributed to October’s disappointing industrial profits, the NBS said.
Slower stockpiling of unsold products is helping companies’ bottom lines, the NBS also said.
Analysts, however, still see problems with overcapacity.
“Surplus inventory is the ghost which is haunting profits,” economists from Minsheng Securities wrote in a note.
“The road ahead to destocking inventory is long and slow.”
The mining industry was the laggard with profits falling 56.3 percent in the first 10 months of the year from a year earlier, the NBS data showed.
Apparent steel consumption in China, the world’s biggest producer and consumer of the alloy, fell 5.7 percent to 590.47 million tonnes in the first 10 months of the year, the China Iron and Steel Association (CISA) said earlier this month.
Baoshan Iron & Steel Co Ltd (Baosteel), China’s biggest listed steel company, last month posted its first quarterly loss in nearly three years of 920.5 million yuan for July through September.
China’s largest coal producer, Shenhua Energy Co Ltd, logged its steepest profit decline in nearly six years, posting an 18.5 percent fall in quarterly profits last month.
Aluminum Corp of China Ltd (Chalco), the country’s biggest producer of aluminium and raw material alumina, posted a net loss of 931.4 million yuan for the first nine months of 2015, hurt by weak metal prices.
China’s Premier Li Keqiang said on Tuesday that China was on track to reach its economic growth target of about 7 percent this year, and the economy was going through adjustments to maintain reasonable medium- to long-term growth.
China’s customs authorities announced a number of new measures on Wednesday to help exporters and importers, describing the current foreign trade environment as “complicated and grim.”
The new policies include lowering various costs for importers and exporters, streamlining the clearance of goods at customs and gathering more accurate statistics.
($1 = 6.3926 Chinese yuan)
Reporting by Sue-Lin Wong, Xiaoyi Shao, Winni Zhou and Samuel Shen; Editing by Sam Holmes