By Jin Jing (China Daily)
Updated: 2007-08-31 09:35

Baosteel Co Ltd, China's largest steelmaker, yesterday posted profit growth of 80 percent in the first six months of this year, aided by rising steel prices and improved production structure.

Baosteel's net profit amounted to 81.6 million yuan (US$10.8 million) in the first half and the earnings per share was 0.47 yuan. The company's stock price climbed 0.1 percent to close at 17.58 yuan yesterday.

"Increasing sales of high value-added products, including car steel plate and electrical steel, contributed greatly to profit growth," said the company in its interim report. Baosteel's total revenue amounted to 94.1 billion yuan, up 28.6 percent from last year.

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S ales of steel products amounted to 10.83 million tons, 38.6 percent of which were specialty steel products. Steel exports stood at 16.3 million tons, accounting for 15 percent of total sales.

The company's overall gross profit margin was 17.53 percent, up 2.53 percentage points from last year. The gross profit margin of steel was 18.7 percent.

"There are lots of uncertainties in the next half of this year. China's steel industry is still faced with pressures from the rising cost, triggered by the government's tax rebate adjustment and rising prices of ore, coal and fuel," said Chen Ying, secretary of the board of directors at Baosteel.

"We will deal with it by adjusting the stainless steel products structure to avoid market risks," she added.

The price of nickel, the raw material for stainless steel, surged 144.47 percent in the first half, far more than that of stainless steel.

"We will raise the share of low-nickel Ferritic stainless steel in total production," said Chen. Currently it's 41 percent.

Fu Zhongzhe, general manager of Baosteel, said yesterday at an online communication platform that it would purchase the steel assets in Baosteel Group to inject into the listed entities.

"Rising steel prices and the good product structure helped Baosteel achieve high profits," said Ma Keming, an analyst at Huatai Securities.

"Baosteel's investments in overseas mining projects or joint ventures can help it to increase its productivity and be more competitive," he added.