Metal Products News
- Baosteel profit jumps 80 percent
Date: 31-Aug-2007 Sources: (Shenzhen Daily)
BAOSHAN Iron and Steel Co., China's largest steelmaker, reported Thursday an 80 percent gain in first-half earnings on the back of higher steel prices, but analysts said profit growth could slow in the second half.
The profit came as steel prices in China, the world's biggest market for the metal, rose in the first half of 2007, supported by the country's double-digit economic expansion and rising exports.
But analysts said they would probably cut forecasts for Baosteel's full-year earnings moderately after the company last week reduced product prices for the fourth quarter.
Baosteel posted net earnings of 8.16 billion yuan (US$1.08 billion) for the first six months of this year, up from a revised 4.53 billion yuan in the same period last year. That was roughly in line with analysts' forecasts of around 8.05 billion yuan.
The world's fifth-largest steelmaker sold 10.8 million tons of steel products in the first half, against 10.9 million tons in the same period last year. Turnover climbed 29 percent to 94.12 billion yuan.
'Profit rose because of higher steel prices in the second quarter, and I think the company did a good job controlling rising costs of raw materials and transportation fees,'said Helen Lau at Daiwa Securities in Shanghai.
'Also, the firm signed long-term contracts with iron ore miners and shipping groups, which I believe can save about one-third of its costs compared with domestic rivals who have spot contracts,'she added.
However, Baosteel's decision to cut fourth-quarter prices of major products has clouded the outlook for the second half of this year and early 2008, analysts said.
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