Costs Increase and Accounts Receivable Collection Period Lengthens
Profit growth rates of Chinese enterprises above a certain scale remained in the 0% range last month, raising concerns about an economic slowdown. Detailed indicators such as cost per unit sales and average collection period of accounts receivable also deteriorated.
On the 27th, the National Bureau of Statistics of China announced that industrial profits of designated enterprises in China (annual sales of 20 million yuan or more) increased by 0.7% year-on-year in May. This is a significant slowdown compared to the 3.3% growth rate recorded in April.
On a cumulative basis from January to May, related enterprise profits reached 2.7543 trillion yuan (approximately 523.3996 trillion Korean won), up 3.4% year-on-year. This is a 0.9 percentage point slowdown compared to the 4.3% growth rate from January to April. The total sales revenue of industrial enterprises on a cumulative basis was 53.03 trillion yuan, up 2.9% year-on-year.
Wei Weining, a statistician in the Industry Department of the National Bureau of Statistics, explained that the slowdown in profit growth rate is "mainly influenced by short-term factors such as a decline in investment return growth rate," but added, "however, the cumulative gross profit growth rate from January to May increased by 0.8 percentage points compared to January to April."
By type of enterprise, state-owned enterprises saw profits decrease by 2.4%, while private enterprises’ profits increased by 7.6%. Joint ventures recorded a 1.0% profit increase, and enterprises invested by Hong Kong, Macau, and Taiwan saw profits rise by 12.6%. Among 41 major industrial sectors, 32% continued to show growth.
Industrial profits in the light industry decreased by 16.2%, manufacturing increased by 6.3%, and the energy sector (electricity, heat, natural gas) grew by 29.5%. By industry, cumulative industrial profits in computer, communication, and electronic equipment manufacturing increased by 56.8% in May, and automobile manufacturing rose by 17.9%. Chemical industry profits decreased by 2.7%, electrical machinery manufacturing declined by 6.0%, and petroleum and coal mining recorded losses.
On a cumulative basis, costs per 100 yuan of operating revenue were 8.38 yuan, an increase of 0.04 yuan compared to the same period last year. The operating profit margin was 5.19%, up 0.02 percentage points year-on-year.
As of the end of May, accounts receivable of surveyed enterprises increased by 8.0% year-on-year, and the average collection period of accounts receivable was 66.8 days, 3.4 days longer than the same period last year. The asset-liability ratio was 57.5%, up 0.2 percentage points from the end of April.
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