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Material costs inflate pressure
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Shanghai Electric Group Corp, China's biggest maker of power equipment, said yesterday full-year earnings were under "pressure" because of higher raw material costs.

Profit margins on power equipment may narrow 1 to 2 percent this year, Chief Financial Officer Yu Yingui said yesterday. Shanghai Electric announced a 14-percent decline in first-half profit on Friday, prompting JPMorgan Chase & Co to slash estimates. Full-year net income may be little changed at 2.84 billion yuan (US$415 million), according to the mean estimate of four analysts compiled by Bloomberg News.

"The outlook is challenging," President Huang Dinan said, without giving a specific profit forecast. "Rising raw material costs, though seeing some retreats recently, may pose pressure on our profit."

JPMorgan cut its profit estimates for Shanghai Electric by 4-5 percent for 2008-2010 after the lower-than-expected interim earnings.

(Shanghai Daily August 26, 2008)

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