Mainly caused by weak freight transport
The China Railway Corp (CRC), a State-owned entity set up in March 2013 to take over the now defunct railway ministry's businesses, saw an abrupt turn from profit to loss in the first quarter, mainly due to sluggish freight transport amid the slowing economy, analysts said on Sunday.
The company made a loss of 6.46 billion yuan ($1.04 billion) in the first quarter in 2015, Xinhua reported Saturday, citing its financial report released on Thursday.
The figure is in stark contrast with its performance in the fourth quarter of 2014. The company reported total profit of over 4 billion yuan in the fourth quarter, according to its financial reports.
In the whole year of 2014, the company made a profit of 636 million yuan, up 147.5 percent year-on-year, according to the company's annual financial report, also released on Thursday.
Li Lei, an analyst at the China Minzu Securities, told the Global Times on Sunday that the slowdown of the economy has led to decreasing freight transport demands in general, which has in turn caused the company's revenues and profits to decline.
The company's passenger revenues climbed to 58.11 billion yuan in the first quarter, up from 49.06 billion yuan for the corresponding period in 2014, according to its first-quarter financial result.
But passenger transport is also facing pressure. Li noted that several new passenger transport lines were put into operation at the end of 2014, and those new lines would make huge losses at an early operational stage.
"The losses might have been reflected in the company's first-quarter data," said Li.
The company's freight revenue during the period dropped to 61.02 billion yuan, compared with 62.23 billion yuan in the same period in 2014. The slump was in line with the overall decline in the country's freight transport demands in recent months, experts said.
The first-quarter report also showed that the company's total debts had climbed to 3.747 trillion yuan by the end of March, causing the company's liability ratio to climb to 66.2 percent, up from 65.52 percent by the end of 2014.
The company said in its financial report that it would issue bonds worth 20 billion yuan in 2015, which would be used in more than 60 projects.
As of April 15, the company and its subordinate enterprises have undue financing bonds worth more than 1 trillion yuan, finance website jiemian.com reported on April 24.
Wu Hong, a professor of economics law at the East China University of Political Science and Law, told the Global Times on Sunday that the CRC should broaden its financing channels, such as introducing private capital into its financing.
