In 2012, the two biggest “loss kings” in the steel industry——*ST Ansteel and Maanshan Iron & Steel——whose losses reached billions of yuan and shocked the market, have recently issued successive positive profit forecasts.

 

Steel

 

　　Yesterday evening, Maanshan Iron & Steel issued a profit forecast stating that, according to preliminary calculations by its finance department, it is expected to achieve a net profit attributable to shareholders of the listed company of about 150 million yuan in 2013. Meanwhile, *ST Ansteel also recently issued a profit forecast stating that in 2013 the company achieved a net profit attributable to shareholders of the listed company of 770 million yuan. Previously, in 2012, *ST Ansteel and Maanshan Iron & Steel became the two biggest “loss kings” in the steel industry with losses of 4.157 billion yuan and 3.863 billion yuan respectively, ranking among the top loss-making A-share listed companies in 2012.

 

　　It is worth noting that, based on disclosed data, the proportion of loss-making listed steel companies has shrunk compared with the previous year. According to statistics by this newspaper's reporter, as of yesterday, 21 listed steel companies had issued profit forecasts, of which 4 reported slight increases, 9 turned losses into profits, 5 forecast profit increases, 2 continued to report losses, and 1 reported a loss for the first time. In addition, Baoshan Iron & Steel has issued a performance express report stating that in 2013 it achieved a net profit attributable to shareholders of the listed company of 5.781 billion yuan, down 44% year on year. In total, in 2013, more than 80% of listed steel companies are expected to achieve positive net profits.

 

　　However, although the proportion of loss-making companies appears to have shrunk, the core steel businesses of these listed steel companies remain far from optimistic, and many companies rely on various non-recurring income or measures to achieve profits, such as government subsidies, asset sales, and adjustments to depreciation policies.

 

　　In this regard, Maanshan Iron & Steel admitted frankly in this profit forecast that the company was able to turn losses into profits in 2013 partly because it carried out cost reduction and efficiency enhancement in all aspects, continued to deepen product structure adjustment, and saw an improvement in production and operation, reducing operating losses; on the other hand, in order to do a good job in its core steel business, the company sold some assets unrelated to its core steel business and obtained asset appreciation gains.

 

　　As for *ST Ansteel, its turnaround was foreshadowed as early as the end of 2012. Through a series of asset swaps and asset depreciation, its situation in 2013 was indeed much better.