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December 23, 2014

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Financing costs hit SOEs’ profits

PROFITS of China’s state-owned enterprises continued to be squeezed by heavy financing costs in November, maintaining a trend that started earlier this year, the Ministry of Finance said in a report released yesterday.

Total revenue at China’s non-financial SOEs increased 3.9 percent during the first 11 months of this year to 43.4 trillion yuan (US$6.9 trillion), slowing from 4.5 percent growth for the January-October period.

Revenue gains continued to be outstripped by operating costs, which rose 4.3 percent during the period, compared with the same period a year earlier.

Finance expenses were the primary driver, up 17.3 percent. Finance costs for the country’s 113 central government-controlled enterprise groups, which accounted for over 60 percent of state sector non-financial firm revenue, jumped 19.7 percent, the ministry said.

China’s central bank in November unveiled the first cut in interest rates in over two years to help Chinese companies manage the rising cost of borrowing and help fuel economic activity.




 

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