More than half of Chinese listed firms that have so far released their third quarter reports have seen falling profits, according to mainland consultant Wind Info on Thursday.

Of the 23 companies that have reported their quarterly performances, the net profits of 14 companies dropped in the July-September period compared with the previous quarter, statistics from Wind Info showed.

According to the financial data provider, most companies, including those nine that had profit growth, said they were affected either by high material costs or low sales prices.

"The third quarter proved to be a hard time especially for the downstream companies," Galaxy Securities analyst Li Guohong said.

"On the one hand, production cost remained high from price surge in raw materials earlier this year. On the other hand, product price fell caused by weak market demand," he added.

SanYou Chemical, for example, attributed its profit drop to a growth in material costs that exceeded their product price increase.

The company's net profit in the third quarter shrank to 8.52 million yuan (US$1.25 million) from the second quarter's 98.82 million yuan and the first quarter's 218 million yuan, the country's leading soda ash producer said in its report.

Statistics from Shan Xi SanWei Group showed that the company's total income in the first three quarters increased 4.88 percent compared with the same period last year, while its total costs rose 21.59 percent.

"This led to a major decline in the net income, which plunged 52.51 percent in the January-September period," the organic chemical provider reported.

Even the country's steel giant Masteel, which reported a net profit surge of 56.46 percent in the first three quarters compared to the same period last year, said a large drop in steel prices had put pressure on the company's performance.

Masteel's third quarter net profit stood at 786 million yuan, down 47.4 percent from the previous quarter.

While expecting more losses to be reported, analysts said business for the manufacturing industry could improve in the fourth quarter, as producers would begin to benefit from decline in raw material prices such as crude oil since July.

(Xinhua News Agency October 16, 2008)