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Shanghai Electric 2003 net profit up 51.04% Shanghai Electric Co Ltd said yesterday it posted 412 million yuan (US$49.6 million) in net profit last year, a rise of 51.04 percent year-on-year, thanks to a sharp cut in management costs and a huge investment return. Shanghai Electric, in which China's biggest machinery equipment maker Shanghai Electric (Group) Corp has a 47.28 percent stake, said that its elevator sales were worth more than 4.1 billion yuan last year, accounting for 74 percent of the firm's total sales. It also became the biggest elevator seller in China when its Shanghai Mitsubishi Elevator unit sold 14 million elevators last year. The company also succeeded in saving money in its operations last year, slashing management costs to more than 450 million yuan (US$54.37 million) from 601 million yuan in 2002. "The drop in management costs contributed most to the company's profit rise," said Shi Haixian, a Shenyin & Wanguo Securities Research Institute analyst. "The restructuring of its parent has helped Shanghai Electric, and the cost will drop further this year." The State-owned Shanghai Electric (Group) Corp, the parent firm, formed a new joint venture with five companies earlier this month in a first step towards restructuring. Shanghai Electric, and the other two listed companies of the group - Shanghai Diesel and Shanghai Electrical Apparatus - were absorbed into the new 9.001 billion yuan (US$1.09 billion) company called Shanghai Electric Group Co Ltd. "Another huge contributor to profit is the company's investment returns, although its sales didn't see a big rise last year," Shi pointed out. Shanghai electric also admitted that its business operation was facing difficulties, including rising steel prices which would affect its elevators, refrigeration equipment and printing and packing equipment. However, it said the main challenge is competition from its
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