Slowing profits for China's state firms

BEIJING - China's state-owned enterprises (SOEs) saw profit growth slow in the first eight months of 2014 amid softening momentum in the broader economy, data released by the Ministry of Finance on Monday showed.

The combined profits of China's SOEs rose 8 percent year on year to 1.64 trillion yuan ($267.4 billion) during the January-August period, slowing from the 9.2 percent rise for the first seven months.

The rise in operating costs continued to outpace revenue growth, dimming the outlook for future profit growth.

Total business revenue for state firms increased 5.5 percent from a year ago to 31.2 trillion yuan in the first eight months, while operating costs rose at a faster pace of 5.7 percent to 30.08 trillion yuan.

Financing costs increased the most, up nearly 20 percent from a year ago, signalling difficulties in raising money have gradually become a problem for industrial giants amid the economic downturn.

Zhang Xu, vice president of the northern branch of China Huaneng Group, said the financial burdens become a majority of company operating costs after commercial loans were taken with high interest rates.

By the end of August, total assets of SOEs stood at 99.06 trillion yuan, while liabilities grew 12.3 percent year on year to 64.69 trillion yuan.

Between January and August, steel and transport companies reported higher profits, but coal and chemical industries saw notable drops in profits.

The figures, which exclude financial firms, were collected from SOEs in 36 provincial-level regions and those administered by the central government.

China has thousands of SOEs, 113 of which are directly administered by the country's central authorities.

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