Baosteel's net profit slumps by 44% in 2011
It is reportedly that Chinese largest steelmaker Baosteel finished 2011 with a 44% dip of their net profit, due to the higher price of global iron ore which caused significant decline over the profitability.
In a formal statement to Shanghai Stock Exchange, the company said that its net profit in 2011 was around US$1.11 million, this number is much lower than US$2 million in 2010, although the company’s sales revenue in 2011 increased by 10% to US$35.432 million.
The tight profit margins is common issue in the steel sector of China due to the facts of rising raw materials, weak demand by economic crisis and excess production capacity in the country.
To react to loss, Baosteel said a month ago that it will sell its subsidiary of stainless steel and special steel to its parent company Baosteel Group Corporation, as this branch is now one of its main sources of losses, accumulated loss of US$244 million for the company.
This decision means that the company’s annual production will drop from 26 million tons to around 22 million tons and have to axe about 8,000 employees.
News Date 03 Apr 2012 16:17:44 reported by Raul Lee