(Yicai Global) March 27 -- Profits at China's industrial companies will slowly rebound after dropping in the first two months of this year, a statistician at the National Bureau of Statistics said.

Profits at industrial firms with an annual turnover of at least CNY20 million (USD2.9 million) fell almost 23 percent to CNY887.2 billion (USD128.9 billion) in the January to February period, data from the NBS showed today.

Profits will gradually bounce back as production and daily life normalize, market needs slowly recover, and the impact of last year's base numbers ease, the NBS’ Sun Xiao said about the latest figures.

Revenue at industrial firms fell 1.3 percent to CNY19.3 trillion (USD2.8 trillion) from the same period a year earlier, according to the NBS data.

The decline in revenue widened 1 percentage point from December because market needs have not recovered despite the rebound in industrial production, Sun noted. Revenue fell more than costs, resulting in a narrower gross margin and pulling down industrial profits by 18.6 points, Sun added. 

China's industrial profit growth may stabilize and rebound in the first half, Wu Chaoming, deputy director of the Chasing Research Institute, told Yicai Global. Domestic needs will likely significantly improve as peak pandemic passes, consumption recovers, and the policy package aimed at stabilizing the real estate industry come into play, Wu said, noting that this will turbocharge the recovery in industrial profits.

The producer price index fell 1.1 percent in January and February from a year earlier, further declining from December, impacted by last year's higher base number, Sun pointed out, adding that this puts firms under increased pressure to make a profit. 

But emerging industries showed faster profit growth, including the electrical and machinery sectors, where profits jumped 42 percent, driven by power battery and photovoltaic equipment, according to Sun. In the transport equipment manufacturing sector, profits soared 65 percent thanks to marine engineering gear and e-bikes, Sun added.

Editors: Dou Shicong, Martin Kadiev