China April industrial profit growth slows from March

BEIJING (Reuters) - Profit growth at China's industrial firms slowed in April, in line with other data for the month which suggested the economy may be losing steam again after picking up earlier in the year. China's industrial firms made 502 billion yuan ($76.59 billion) in profits last month, up 4.2 percent from the same period last year and compared with growth of 11.1 percent in March, the National Bureau of Statistics said on Friday. For the first four months of the year, profits reached 1.84 trillion yuan, a 6.5 percent gain from a year earlier but down from a 7.4 percent rise in the first quarter. The data covers large firms with at least 20 million yuan of annual revenue. Product inventories at industrial firms fell 1.2 percent year on year at end April, the first drop in recent years, the statistics bureau said, without giving details. A return to profit growth early this year and a rebound in commodities prices such as steel had sparked hopes that China's industrial sector was finally perking up after a protracted downturn that has dragged on the world's second-largest economy. But a string of disappointing economic data for April and a sharp reversal in raw material prices in recent weeks suggest the outlook for China's industrial sector remains challenging. Indeed, sectoral performance remained highly uneven. Oil refiners' profits rose more than 80-fold in January-April on-year, while steel mills saw a 42 percent gain as prices rebounded and they upped production. But coal miners saw profits fall 92.2 percent, while oil and gas producers posted a loss. Profits in the manufacturing sector rose 13.3 percent in January-April, indicating relative strength in the sector despite stubbornly weak exports. Debt at Chinese industrial companies increased 4.8 percent on an annual basis to 55.8 trillion yuan as of end-April, compared with a 5.2 percent rise in March. China's growing debt and risks to its financial system have topped investors' worry lists this year, but the mood in Beijing seems to have shifted as the government expresses concerns about the dangers of too much debt-fuelled stimulus. A May 9 commentary in the People's Daily said China will not use excessive investment or high credit growth to boost growth. Profits at state-owned firms fell 8.4 percent in January-April on-year, data showed earlier this week. A survey of over 2,000 firms by the Cheung Kong Graduate School of Business found the industrial economy did not stabilise in the first quarter, with excess capacity at a record high. (Reporting by Elias Glenn and Beijing Monitoring Desk; Editing by Kim Coghill)