The cycle of interest rate hikes by the central bank, The People's Bank of China, in 2011 led to a 44.67 percent year-on-year increase in the interest expenses of 343 listed companies, excluding banks, to 19.74 billion yuan, eroding profitability, reports China Securities Journal, citing financial information provider Hexin Flush Information Network (300033).
The growth in interest expenses was 1.64 times greater than the 27.09 percent increase in net profit to 83.81 billion yuan.
The 343 companies posted an 18.08 percent year-on-year rise in operating profit to 78.22 billion yuan.
The 343 companies spent 138.58 billion yuan on sales, administration, and finance-related charges in 2011, with interest charges accounting for 14.24 percent of the total.
The figure in 2010 was 113.07 billion yuan, and interest expenses accounted for 12.07 percent of the total.
There were six companies, including Inner Mongolia Baotou Steel Union (600010) and Henan Shen Huo Coal Industry and Electricity Power (000933), which reported interest expenses of more than 500 million yuan each, with total interest expenses  hitting 4.31 billion yuan.
Seventeen companies faced a situation where interest expenses accounted for more than 50 percent of the total sales, administration, and finance-related charges, including Dongling Grain and Oil (000893).
The interest expenses of mechanical equipment makers totaled 1.36 billion yuan, while the amount for chemical companies hit 2.84 billion yuan.
Six ferrous metal producers incurred total interest expenses of 1.62 billion yuan, exceeding the total operating profit recorded.
Shares of Inner Mongolia Baotou Steel Union rose by its daily limit of 10.02 percent in morning trading.