Iron and steel enterprises are troubled by high production costs of iron ore

Summary of the 2011 interim results Hong Kong-listed three major steel companies, aviation companies also face fuel costs too much trouble, the bigger problem is the production of hot-rolled or cold-rolled products price increase is relatively limited, have emerged The disadvantages of profitability are obviously retrogressed; the estimated fuel price is predictable...

The 2011 interim results of the three major steel companies listed in Hong Kong are also facing the problem of excessive fuel expenditures for aviation companies. The bigger problem is that the price increase of hot-rolled or cold-rolled products produced is relatively limited. Lee clearly regressed the disadvantages; estimated the possibility that fuel prices will fall back in the foreseeable future, and the bargaining power of steel companies is difficult to improve under the national policy, but the government is backward The practice of production capacity will reduce the vicious competition of low-priced and low-quality products of some SMEs in the steel market. The big group still has a way to do it.

The iron and steel industry's hot-rolled cold-rolled products have a limited price increase

From the 2011 interim results report, the marketing business and returns of the three major state-owned steel shares listed in Hong Kong have the same differences. The key points are: (1) performance is far from ideal: (1) cold rolling and hot rolling The profit attributable to shareholders of Angang Steel was only 236 million yuan, a sharp decrease of 91.5% year-on-year. It was mainly due to an increase of 15.02% in the expenditure of 44.02 billion yuan, much higher than the turnover of 46.22 billion. 45.2% of the yuan, 9.82 percentage points, so that the overall gross profit margin decreased by 8 percentage points to only 4.6%; even (2) Maanshan Iron and Steel (00323) net profit of 3.1 billion yuan Above Angang Steel, the problem is a significant decrease of 70.2% year-on-year. Similarly, 42% of operating expenses rose more than 36.2% of income, which further reduced gross profit margin by 3 percentage points to only 1%, compared with ordinary workers. The intensive processing industry has a lower return, which is unacceptable for large companies in key industries that make huge investments in fixed capital.

Even though (3) Chongqing Iron & Steel's medium-term net profit increased by 95% year-on-year, the amount involved was a pitiful amount of 14.12 million yuan, mainly due to non-operating income of 210 million yuan and a year-on-year increase of 23.39 times. Greatly backwards. The non-operating income of the group includes compensation for loss of 189 million yuan for relocation and loss of 10.89 million yuan for gas emission reduction. The tax refund was 5.04 million yuan and the government subsidy was raised from 1.51 million yuan to 2.7 million yuan. Starting to double the non-operating income. The operating expenses increased by 91.8%, slightly higher than the income of 84.7%. Therefore, even if the gross profit margin decreased by 3.2 percentage points, it still has 5.7% (see Table 1), which is higher than Angang and Maanshan Iron and Steel. But the performance is still a hundred steps and a hundred steps.

The pressure on the operating expenses of the iron and steel enterprises was caused by the sudden increase in fuel consumption. It can be seen from the performance statement of Maanshan Iron & Steel Co., Ltd. that the prices of raw materials purchased by steel enterprises are high, which makes the production and operation of steel enterprises It is a big difficulty: the average CIF price of imported iron ore is 160.9 US dollars per ton, a year-on-year increase of 46.5% and the highest level in history, which shows that the steel industry is not difficult; In the first half of the year, the sales profit of the steel association members was 3.14%, down 0.4 percentage points year-on-year, and the dark group was still deeply threatened by the vicious competition of low-priced and low-priced SMEs.

(II) Angang's performance statement also has a similar statement: the main reason for the decline in gross profit margin of hot rolled products is ore. The price increase of alloys such as scrap steel and coal is greater than the increase in product prices; the increase in operating costs of cold rolled products and the decrease in gross profit margin are mainly affected by the increase in raw material prices.

From (3) Chongqing Iron & Steel's sales report data listed in the performance report, it shows that the company not only faces the deep pressure of rising costs, but also cannot raise corresponding and reasonable ex-factory prices accordingly, and the performance is far from ideal. The situation is difficult: the average sales of steel (blank) is 4,288 yuan per ton, a year-on-year increase of only 10.6%, far lower than the increase in operating costs caused by raw materials, fuels, etc., because the group only increased productivity. The sales volume increased by 68.6% to 2.877 million tons, and the sales of steel (blank) products, which accounted for 94.93% of the total revenue, increased by 86.4% year-on-year to 12.338 billion yuan, causing the performance loss. Greatly reduced.

The decline in production growth is also likely to drag down the progress of solid investment

It is also possible to look at the more detailed production, sales and gross profit margin information from (4) the sympathy for the difficulties faced by the steel giants, such as: (A) Chongqing Iron and Steel's plate revenue in the first half of the year increased by 4.216 billion yuan year-on-year. 20.12%, but the cost increased by 23.28% to 3.944 billion yuan, which reduced the gross profit margin by 2.39 percentage points to 6.47% over the same period. (ii) The turnover of profiles was 2.213 billion yuan. The year-on-year growth is undoubtedly as high as 33.01%, but it is less than the cost increase of 36.28%. It also reduces the gross profit margin by 2.27 percentage points to 5.34% (see Table 2). (B) The return on production and sales of Maanshan Iron & Steel's core products, even more difficult for steel companies to fall into trouble: (1) sheet business revenue of 17.836 billion yuan increased by 15.48% year-on-year, but far lower than the cost of 28.55% up to 13 .07 percentage points, and the gross profit margin fell to only 0.43% and a sharp decrease of 10.12 percentage points year-on-year; even if the (2) steel revenue of 6.457 billion yuan increased by 40.89%, the cost increased. 1.16 percentage points to 42.05%, the gross profit margin of 4.37% also fell by 0.78 percentage points; (3) the bar revenue of 10.372 billion yuan increased by 26.83%, compared with the cost increase of 26 .85% increase by more than 10%, gross profit margin also fell by 0.02 percentage points to 7.22%; (3) train and ring revenues of 760 million yuan rose by 40.74%, also lower than the cost of 46.63 %, the gross profit margin of 5.66% is also lower than the 3.79 percentage points of the same period in 2010 (see Table 4).

The sales revenue of Angang's hot-rolled steel increased by 12.19% year-on-year to 13.52 billion yuan, which was lower than the cost of 21.52%, which was 9.33 percentage points, making the gross profit margin 7.26% far lower than the previous year. 13 percentage points; the income of cold rolled products increased by only 0.58% to 19.11 billion yuan, which was much lower than the 15.87% increase in cost. The gross profit margin was 12.62%, which was significantly lower than the previous year's 11.53. Even if the plate revenue is 7.658 billion yuan, it only increased by 0.64%, higher than the cost of 0.34%, and the gross profit margin increased by 0.3 percentage points to only 3.66%. The industry is not difficult, obviously it needs more and more effective policy support from the state.

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