Listed firms see narrowing profits

BEIJING - China's listed companies saw narrowing profits in the first quarter as the country's economy ran at the slowest pace since the third quarter of 2009, reports released by those companies showed.

As of Sunday, altogether 713 companies had disclosed their quarterly results, of which 385 posted year-on-year gains, 328 reported profit declines and 118 registered losses, according to information disclosure from the Shanghai and Shenzhen stock exchanges.

Of the 566 companies that had unveiled performance forecast for the January-March period, 222 predicted positive growth, 27 expected a swing to the gains while 150 said profits would decline, 149 forecast a turn to losses.

The general downward trend in their profitability came as China's economy expanded 8.1 percent year-on-year in the first quarter of 2012, marking the fifth consecutive quarter of decline.

Revenue up, profits down

A major feature that characterized listed companies's first-quarter performance was the contrast between rising revenues and dwindling profits.

Statistics showed gross revenue of the 713 companies grew at an average rate of 10.21 percent year-on-year in the first quarter, but net profits dropped 8.99 percent during the period.

Taking Deluxe Family, a real estate developer in Shanghai, as an example. It reported a stunning revenue growth of 51,377.45 percent in the first quarter, but net profits logged a 89.07-percent slump.

According to the companies' statements, rising prices of raw materials and increasing operation costs were the main drags on their profitability, added by a combination of hikes of management fees and losses arising from investments.

Better interim forcast

While the release of quarterly results is drawing to a close, many companies had started to publish interim forecasts.

As of Sunday, a total of 323 companies had disclosed interim forecasts, with 199 predicting gains, 71 declines and 47 losses, while 6 remained uncertain.

Based on current forecasts, it was still too early to jump to conclusions about the second-quarter prospects, but many analysts held that profits had bottomed out in the first quarter and interim results would generally improve on grounds that economic growth would rebound.

Shen Jianguang, chief economist of Mizuho Securities Asian Co., cited the pickup in the consumption and industrial production as possible signs of an improving economy.

China's retail sales, the major gauge of consumer spending, rose 15.2 percent year-on-year in March, up 0.5 percentage points from that registered in the first two months.

With the exception of jewels and cars, most goods enjoyed a sales recovery, he said.

Meanwhile, the industrial value-added output was up 11.9 percent from a year earlier, with the output of steel products and cement growing 10.2 percent and 7.9 percent, respectively, a sign of stabilizing construction in the country.

Peng Wensheng, chief economist at the China International Capital Corp., said the month-on-month pickup of major indexes showed that growth momentum had stabilized.

He predicted a slight climb of quarter-on-quarter growth for the April-June period.