Industrial profit growth slows following rate hikes

Profits growth of China’s industrial companies slowed in April, after the government raised interest rates and curbed bank lending as part of efforts to fight inflation and asset bubbles, Bloomberg reported. Profits for industrial companies generating more than RMB20 million in annual sales rose 29.7% in the first four months of the year to RMB1.49 trillion (US$230 billion), slightly lower than the 32% gain recorded in the first quarter of this year. In addition to economic tightening, manufacturers are facing higher electricity costs, said Dariusz Kowalczyk, senior economist at Credit Agricole CIB in Hong Kong. Aluminum Corp of China Ltd (ACH.NYSE, 601600.SH, 2600.HK), the country’s largest aluminum producer, reported a 47% drop in first-quarter profit due to higher costs for raw materials and fuel. Meanwhile, Sinovel Wind Group (601558.SH), China’s largest turbine maker, said profit growth slowed to 1% in the first quarter compared with a 51% gain in the full year 2010.