Workers make disposable gloves at an industrial base of a company in Xinji, north China's Hebei Province, March 5, 2020. Local authorities encouraged enterprises producing personal protective equipment to resume production in an orderly way amid the fight against the novel coronavirus epidemic. Photo:Xinhua

Profits at major Chinese industrial firms above a designated scale plunged a record 38.3 percent year-on-year to 410.7 billion yuan ($58.08 billion) from January to February amid the coronavirus epidemic, according to the National Bureau of Statistics (NBS) on Friday.

Among 41 major industries, 37 saw shrinking revenues and just four reported increased year-on-year revenues in the first two months of the year. Profits in key sectors such as electronics shrank as much as 87 percent, the auto industry plunged 79.6 percent and the electric apparatus sector dropped 68.2 percent, per an NBS statement.

"The major reason for the record plunge in industrial profits was the coronavirus outbreak," Tang Jianwei, chief researcher at the Bank of Communications' Financial Research Center, told the Global Times on Friday.

Weak demand during the outbreak together with hiking costs partly brought about by restricted logistics and worker shortages also weighed on the drastic revenue decline, Tang said.

China has been ramping up all-out efforts to contain the outbreak since late January, and has rolled out strict quarantine measures. People have stayed indoors voluntarily and factories across the nation delayed production resumption after the Spring Festival holidays.

Both production and sales dropped sharply in February due to unrecovered production capacity, Zhang Weihua, an NBS official, said in an online statement.

With added epidemic prevention costs and rigid staff and depreciation costs, each 100 yuan of industrial enterprises' operating income cost 94.19 yuan in the first two months, a cost increase of 0.85 yuan year-on-year, according to Zhang.

China is now seeing an easing epidemic situation, with firms and society speeding up recovery. The short-term impact of the coronavirus will be gradually alleviated, and the efficiency of industrial enterprises will be effectively improved, said Zhang.

However, profit prospects will remain gloomy for at least the first half of the year, Tang forecasted, given the pandemic's rapid spread overseas which will continue to depress demand and impact the global supply chain.

Global Times