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MIL OSI Translation. Region: Peoples Republic of China-China Statistical Information Network-Chinese-

Industrial profits rebounded quarter by quarter

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—— Zhu Hong, a senior statistician from the Department of Industry of the National Bureau of Statistics, interprets the profit data of industrial enterprises

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Since the beginning of this year, in the face of the huge impact of the new crown pneumonia epidemic and the complex and severe domestic and foreign environment, all regions and departments have done a solid job of “six stability”, fully implemented the “six guarantees” task, and coordinated efforts to promote epidemic prevention and control and economic and social development. Obvious results have been achieved, production demand has gradually recovered, industrial circulation has continued to improve, and industrial enterprise profits have steadily recovered. From January to September, industrial enterprises above designated size realized profits of 4366.50 billion yuan, a year-on-year decrease of 2.4%, and the rate of decline narrowed by 2.0 percentage points from January to August. Among them, profit in the third quarter increased by 15.9%, an increase of 11.1 percentage points faster than in the second quarter.

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   1. Corporate profitability improves quarter by quarter

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   Production and sales recovered quickly, and profits improved quarter by quarter. Benefiting from the overall advancement of epidemic prevention and control and economic and social development, the production and sales of industrial enterprises have rapidly recovered and grown steadily, and the relationship between supply and demand has continued to improve. In the third quarter, the added value of the industrial enterprises above designated size increased by 5.8% year-on-year, and the operating income increased by 4.8%, both showing a trend of rising quarter by quarter. Driven by the steady recovery of income, the profit growth rate of industrial enterprises dropped by 36.7% from the first quarter, increased by 4.8% in the second quarter, and then accelerated to 15.9% in the third quarter, showing a trend of “turning from falling to rising and accelerating growth”.

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   There are more industries with profit growth, and key industries are clearly driving. In the third quarter, among the 41 major industrial sectors, 31 industries increased their profits year-on-year, an increase of 6 from the second quarter; among them, 24 industries saw profit growth exceeding double digits. The industries with the most new profits were mainly: automobile manufacturing industry increased by 53.8%, non-ferrous metal smelting and rolling processing industry increased by 52.0%, ferrous metal smelting and rolling processing industry increased by 39.1%, general equipment manufacturing industry increased by 32.4%, electricity and heat production And the supply industry increased by 22.4%, and the electrical machinery and equipment manufacturing industry increased by 16.8%. These six industries together drove the profit of industrial enterprises above designated size in the third quarter to increase by 10.0% year-on-year.

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   Unit costs have fallen and profitability has increased. In the third quarter, the cost per hundred yuan of operating income of industrial enterprises above designated size decreased by 0.71 yuan from the second quarter and 0.53 yuan from the same period last year, effectively alleviating the pressure on the production and operation of the enterprises caused by the sharp increase in costs in the first half of the year. The profitability of enterprises has been significantly enhanced. In the third quarter, the operating income margin of industrial enterprises above designated size increased by 0.64 percentage points year-on-year, and the increase was further increased on the basis of a year-on-year rise in the second quarter.

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   The amount of corporate losses has dropped significantly, and the scope of losses has shrunk. In the third quarter, the loss of industrial enterprises above designated size fell by 21.4% year-on-year, and in the second quarter it increased by 13.1%. At the end of September, the company’s loss was 3.9 percentage points lower than at the end of June.

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   2. The balance of profit growth has improved significantly

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  The profits of major industrial sectors maintained double-digit growth. In the third quarter, the equipment manufacturing industry’s profit increased by 22.5% year-on-year, driving the profit of industrial enterprises above designated size to increase by 7.8%. Among them, benefiting from various policy support such as the switch of environmental protection standards, the acceleration of infrastructure projects, and the promotion of consumption, the profits of the automobile, general equipment, and special equipment industries were the first to recover in the second quarter, increasing by 26.0%, 28.2% and 63.5% respectively in the quarter. In the three quarters, it continued to maintain a relatively rapid growth of over 20%. The profit growth of the raw material manufacturing industry turned from negative to positive, with a year-on-year growth of 23.0% in the third quarter and a decrease of 17.9% in the second quarter. Among them, due to the recovery of market demand and the rebound of product prices, the profits of petroleum processing, steel, non-ferrous metals and other industries have changed from a double-digit decline in the second quarter to a growth of more than 30% in the third quarter. The profit of the consumer goods manufacturing industry recovered steadily, with an increase of 14.3% in the third quarter, 4.2 percentage points faster than in the second quarter. Among them, the profit growth rate of food manufacturing, tobacco, textile, paper and other industries are all above 20%.

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   Synergistic recovery of profits of enterprises of different sizes. With the gradual recovery of investment and consumer demand, the profits of the petroleum, steel, automobile and other industries quickly recovered, and the profits of large enterprises have rebounded significantly. In the third quarter, the profits of large and medium-sized enterprises increased by 16.0% year-on-year, an acceleration of 14.7 percentage points over the second quarter; among them, the profits of large enterprises increased from a 4.0% decline in the second quarter to an increase of 13.8%. Benefiting from a number of policy support, the profit of small enterprises above designated size in the third quarter increased by 15.8% year-on-year, which was 1.7% faster than the second quarter.

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  In September, the profits of industrial enterprises above designated size increased by 10.1% year-on-year, still maintaining double-digit growth, and the growth rate dropped by 9.0 percentage points from August, which was mainly affected by three factors. First, changes in industrial product prices squeeze profit margins. In September, the ex-factory prices and purchase prices of industrial products had a significantly weaker effect on profit growth than in August. Second, rising expenses and substantial asset impairment losses for certain industries and enterprises have had a certain impact on profit growth. Third, major industries such as electronics and automobiles were affected by multiple factors such as rising raw material costs, increased sales and R&D expenses, and a high base in the same period. The profit growth rate in September fell.

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   Although the profits of industrial enterprises continued to recover steadily in the first three quarters, the current cumulative industrial enterprise operating income and profit growth rate have not yet turned positive. The growth rate of accounts receivable and finished goods inventory is still relatively high, and the foundation for continued improvement in corporate profits still needs to be consolidated. In the next stage, in accordance with the requirements of promoting high-quality development and building a new development pattern, we must further stimulate the vitality of market players, focus on solving the difficulties of enterprise production and operation, and promote the sustained and stable development of the industrial economy.

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EDITOR’S NOTE: This article is a translation. Apologies should the grammar and/or sentence structure not be perfect.

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