By unknown , 2008-04-02 12:00:00
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According to the annual report for 2007 by Baosteel Company Ltd, the company had a turnover of 191.6 billion Yuan, increasing 18% from that of 2006; profits of 19.31 billion Yuan, up 0.54%; net profit of 12.72 billion Yuan, down 2.75%; profit per share of 0.73 Yuan, down by 2.67% from that of a year ago. The company intends to pay 3.5 Yuan in cash (taxes included) per ten shares.
According to Baosteel, the full diluted profit margin on net assets came to 14.37%, down by 1.72% with the same comparison.
Pressure from raw materials
The iron ore import prices in 2007 rose by 9.5%, following an increase of 19% in 2006, and the ocean freight cost continued the upward trend, and prices for the raw materials for stainless steel, coke, coal and alloys kept increasing, especially the nickel products, which caused losses in stainless steel business.
To cope with the rising raw materials costs, Baosteel raised the steel prices and began integration and cooperation with other steel companies in China, including Bayi Iron and Steel, Handan Iron and Steel and so on.
Meanwhile, the company said, “the strong demand and rising raw materials prices continues to push the steel market prices”, and the company succeeded in several prices hikes for main products, therefore absorbing the increasing costs and lifting profits.
The gross profit rate for stainless steel downed
According to the annual report, though the turnover from iron and steel, and trade and other businesses had an increase of 7.78% to 22.73% in 2007, but the costs had a higher increase, ranging from 8.37% to 24.05%, therefore the operation profit declined by 1.99% from a year ago.
The stainless steel had the largest decline in gross profit rate, down by 17.29% from that of 2006. The ratio of hot rolled, cold rolled and wide plate had an increase, but those for stainless steel and special steel both declined, with stainless steel results even in red. In 2007, Baosteel had a turnover of 20.6 billion Yuan from stainless steel business, but the costs for that field came to 21.8 billion Yuan.
During the first half of 2007, Baosteel had a net profit of 80% higher, to 8.159 billion Yuan, taking more than half of the whole, and meaning that of the later half only 50% more of that in first six moths. Baosteel had said that, as the high priced nickel materials purchased in the first half of 2007 needed a time to be rolled into products, the stainless steel sector might have a loss in the second half.
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