Study On The Profitability Of Chinese Steel Enterprises

Known as "industrial food," China’s steel industry has always been closely related to national economy and industry. In the21st century, China’s steel industry has developed dramatically and achieved remarkable results in saving emission reduction and has effectively met the economic and social development needs. However, along with the rapid development of China’s steel industry, some new problems have also evolved. In recent years, due to rapid investment growth, China’s steel industry is facing serious overcapacity. Meanwhile, the high cost of production, the blocked export and other factors, are squeezing the profit margins of the steel industry. These issues are well impacted by the world economic environment, and also are China’s inevitable factors in economic development process. The problems that profitability of the business is reducing are prevalent in the entire industry, while some steel companies have occurred losing streak. These phenomena have caused widespread concern in the community and the people in the industry.Based on listed companies in China’s steel industry, this article introduced the development situation and development trend of China’s steel industry, pointed out that the steel industry is currently facing a common problem, and elaborated the importance and necessity of the analysis of iron and steel enterprises’profitability. Profitability is one of the key performance indicators reflecting the financial situation. In the context that current profitability of steel enterprises is generally weak; it will be of very important practical significance to study steel corporate profitability situation and propose methods to enhance the profitability. Through empirical analysis of the profitability of some typical steel listed companies, the article extracted the major factors that impact on profitability and selected control indicators as return on investment targets and cash flow control as the greatest impact factors on the profitability indicators. The article also put forward some of constructive comments of improving profitability of China’s iron and steel enterprises.