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Dalian Jinniu net profit up 3.12%

By Wang Ying (China Daily)
Updated: 2009-02-11 08:04

Shenzhen-listed Dalian Jinniu Co Ltd, the first publicly traded Chinese steelmaker to announce its 2008 figures, posted a 3.12 percent increase in net profit from 2007 to 26.9 million yuan on sales of 3.4 billion yuan, up 0.13 percent. Earnings per share were 0.09 yuan.

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The company said in its annual report that its steel output in 2008 fell 18.11 percent from a year before to 412,700 tons.

The company's performance, cast against the backdrop of an industry-wide slump, was closely watched by stock analysts and investors for indications on what to expect from other larger steelmakers reportedly weighed down by falling demand and mounting inventory.

Nineteen listed steel producers have already projected shrinking profits for 2008.

"In the next couple of months, we expect to see more steelmakers reporting lower earnings," said Zhou Xizeng, an analyst with CITIC Securities.

Dalian Jinniu didn't make any income projections for 2009. In its annual report, the company indicated the steel industry could stand to benefit from the government's 4-trillion-yuan stimulus package, which calls for massive infrastructure construction. The package also includes an easing of the government's monetary policy, resulting in easier credit, which should be most welcome by steel mills with big chunks of capital tied up in unsold inventory.

But the prospect for the steel industry in 2009 will continue to be clouded by the ongoing fall in export demand. Chinese steel producers are taking a further hit from the strong currency, which has undercut the competitiveness of their products in overseas markets.

Unsurprisingly, Dalian Jinniu predicted that 2009 will be the most critical and severe year in recent memory.

The company said it planned to increase its steel production to 464,000 tons in 2009.

Dalian Jinniu said it would skip the dividend payout for 2008 to conserve cash for expanded production and improved product structure.