BEIJING: Profits at China's industrial firms fell 4% in 2022 from a year earlier, official data showed on Tuesday, squeezed by the impact of strict COVID-19 curbs, but an expected economic recovery this year is likely to revive the sector's sales and earnings. The percentage decline for the full year was deeper than the 3.6% fall recorded in the first 11 months, the National Bureau of Statistics (NBS) data showed, indicating a poor end to the year.

The 8.4 trillion yuan ($1.24 trillion) decrease in profits in 2022 followed a 34.3% rise in 2021. Frequent and widespread COVID disruptions hit production at industrial firms, hurting both supply and demand sides and putting huge upward pressure on costs, said Bruce Pang, chief economist at Jones Lang Lasalle. Economists expect economic activity to normalise this year, supported by a recovery in consumption and travel, though some said declining foreign demand may cause the manufacturing sector to underperform.

"Many export-oriented factories either closed earlier or resumed production later than normal this year," economists at Barclays said in a client note, referring to factory closures for the Lunar New Year holiday that this year fell in January. In 2022, profits at foreign firms slumped 9.5%, while those at private-sector firms shrank 7.2%, NBS data showed.

Profits fell for 19 of 41 major industrial sectors last year, with the ferrous metals smelting and pressing industry reporting the sharpest decline at 91.3%. Manufacturing sector profits were down 13.4% as stringent COVID lockdowns and curbs disrupted logistics and production at major manufacturing hubs last year.

Industrial profits data covers firms with annual revenue above 20 million yuan from their main operations. Industrial output in December was 1.3% higher than in the same month a year earlier, versus 2.2% gain in November.

Manufacturing activity was hit in December by the rampant spread of COVID that kept workers indoors after the government ditched some of the world's toughest pandemic controls early that month.

The NBS did not report a profit figure for December alone. However, the official manufacturing purchasing managers' index showed factory activity rebounded in January, supported by the easing of the latest wave of COVID infections.

Factory owners are eager to get on with what they expect to be a gradual recovery for their sector, which makes almost a third of the world's manufactured goods and is a growth engine of the world's second-largest economy.

At a meeting chaired by Premier Li Keqiang, the cabinet on Saturday said China should aim to help its economy pick up in early 2023, focusing on consumption recovery as a major driver.

China's economic growth in 2022 slowed to one of its weakest rates in nearly half a century as the economy was hit hard by strict COVID curbs and a property market slump. Liabilities at industrial firms rose 8.6% in 2022 from a year earlier, compared with 9.0% growth as of end-November.

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The Profit of Industrial Enterprises above Designated Size in 2022

National Bureau of Statistics of China 2023-02-01 09:30

In 2022, industrial enterprises above designated size achieved a total profit of 8,403.85 billion yuan, a decrease of 4.0 percent over the previous year (calculated according to comparable standards, see note II for details).

In 2022, among industrial enterprises above designated size, state-owned holding enterprises achieved a total profit of 2,379.23 billion yuan, an increase of 3.0 percent over the previous year; joint stock enterprises realized a total profit of 6,161.09 billion yuan, a decrease of 2.7 percent; the total profits of foreign-invested enterprises and enterprises invested by Hong Kong, Macao and Taiwan reached 2,003.96 billion yuan, a decrease of 9.5 percent; the total profits of private enterprises reached 2,663.84 billion yuan, a decrease of 7.2 percent.

In 2022, the mining industry realized a total profit of 1,557.36 billion yuan, an increase of 48.6 percent over the previous year; the total profit of the manufacturing industry was 6,415.02 billion yuan, a decrease of 13.4 percent; the total profit of power, heat, gas and water production and supply industry was 431.47 billion yuan, up 41.8 percent.

In 2022, among the 41 major industrial industries, 21 industries' total profits increased over the previous year, 19 industries decreased, and 1 industry changed from loss to profit. The profits of the main industries are as follows: the total profits of the oil and gas exploitation industry increased by 1.10 times over the previous year, power and heat production and supply industry increased by 86.3 percent, the coal exploitation and washing industry increased by 44.3 percent, electrical machinery and equipment manufacturing industry increased by 31.2 percent, special equipment manufacturing industry increased by 3.4 percent, automobile manufacturing industry increased by 0.6 percent, general equipment manufacturing industry increased by 0.4 percent, agricultural and sideline food processing industry increased by 0.2 percent, the chemical raw materials and chemical products manufacturing industry decreased by 8.7 percent, computer, communication and other electronic equipment manufacturing industry decreased by 13.1 percent, non-metallic mineral products industry decreased by 15.5 percent, the non-ferrous metal smelting and processing industry decreased by 16.1 percent, textile industry decreased by 17.8 percent, the petroleum, coal and other fuel processing industry decreased by 82.8 times, and the ferrous metal smelting and processing industry decreased by 91.3 percent.

In 2022, industrial enterprises above designated size achieved an operating revenue of 137.91 trillion yuan, an increase of 5.9 percent over the previous year; the operating cost was 116.84 trillion yuan, an increase of 7.1 percent; the profit margin of operating income was 6.09 percent, a decrease of 0.64 percentage point over the previous year.

At the end of 2022, the assets of industrial enterprises above designated size totaled 156.12 trillion yuan, an increase of 8.2 percent over the previous year; liabilities totaled 88.30 trillion yuan, an increase of 8.6 percent; the total owner's equity was 67.82 trillion yuan, an increase of 7.6 percent; the asset liability ratio was 56.6 percent, up 0.3 percentage point from the previous year.

At the end of 2022, the accounts receivable of industrial enterprises above designated size were 21.65 trillion yuan, an increase of 12.3 percent over the previous year; the inventory of finished products was 6.04 trillion yuan, an increase of 9.9 percent.

In 2022, the cost per 100 yuan of operating income of industrial enterprises above designated size was 84.72 yuan, an increase of 0.91 yuan over the previous year; the expense per 100 yuan of operating income was 8.20 yuan, a decrease of 0.42 yuan over the previous year.

At the end of 2022, the operating income of industrial enterprises above designated size per 100 yuan of assets was 92.4 yuan, a decrease of 2.9 yuan over the previous year; the per capita operating income was 1.827 million yuan, an increase of 134,000 yuan over the previous year; the inventory turnover days of finished products were 17.6 days, an increase of 0.9 day over the previous year; the average recovery period of accounts receivable was 52.8 days, an increase of 3.5 days over the previous year.