Wuhan Iron & Steel Co said yesterday its net income surged 67 percent last year as it boosted profit margins amid a slower sales increase and higher iron ore costs.

The country's No. 3 steel maker said its net profit reached 6.52 billion yuan (US$931 million) last year, against 3.90 billion yuan in 2006, according to a filing with the Shanghai Stock Exchange.

Sales increased 26.1 percent to 54.2 billion yuan while its return on equity reached 25.3 percent in 2007, up 13.4 percentage points from a year before, according to the statement.

In a separate filing, WUHAN Iron also said that its net income for the first quarter of 2008 rose 43 percent from the same period last year to 2.05 billion yuan.

Revenue during the period jumped 24 percent to 15.8 billion yuan.

''The earnings growth has exceeded the industry average largely due to the improvement of gross margins,'' said Nie Xiuxin, a Ping An Securities Co analyst. ''The firm has the ability to counter the rising iron ore costs.''

The average contract prices of hot-rolled steel, cold rolled steel and silicon steel for deliveries in the first five months of this year rose 750 yuan, 990 yuan and 3,140 yuan per ton, respectively, Nie said.

That will more than offset an average rise of 340 yuan per ton for steel products due to the 70-percent increase in global iron ore prices this year, Nie said.

WUHAN Iron is set to benefit from its leading position in the silicon steel business, whose gross margin is set to nearly double that of traditional steel products in the next three years, said Yang Baofeng, an Orient Securities analyst.

Shares of WUHAN Iron jumped 9.01 percent to close yesterday at 13.07 yuan, against a 0.99-percent increase in the benchmark Shanghai Composite Index.

(Shanghai Daily April 23, 2008)