Shares in China's largest steelmaker Baosteel fell 1.31 percent after it posted a drop in net profit growth of 49.68 percent for the third quarter.
The company attributed the profit downturn to the poor performance of the stainless steel product segment, which accounted for 11.43 percent of the group's total revenue. Baosteel's share price plunged 6.5 percent in the morning session as many stockbrokers downgraded its annual profit growth estimate.
Baosteel posted a net profit of 2.38 billion yuan from July to September, down from 4.75 billion yuan in the same period last year. Its earnings per share dropped 48 percent to 0.14 yuan. Its net profit in the first nine months was 11.4 billion yuan, up 15.3 percent from the year before.
"The falling sales price of stainless steel products from May and high purchase prices caused the poor performance in that area," Chen Ying, board secretary of Baosteel Co Ltd, said yesterday.
The sales price of stainless steel has dropped 35 percent since May, said Chen. According to a report from China International Capital Corp Ltd, Baosteel's loss on its stainless steel products business is estimated to be 1.52 billion yuan for the third quarter.
"The price of stainless steel and nickel is expected to rise in the third quarter, a new production line has been put into operation and the company's product structure has improved. So Baosteel's performance is expected to lift in the fourth quarter this year," said Fu Zhongzhe, general manager of Baosteel Co Ltd.
Source: China Daily
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