High-Speed Rail Line Pumps up Profit for Chinese Train Maker

Earnings period pre-dates fatal train crash, other problems on Beijing-Shanghai line.

A Chinese train maker said its first-half net profit surged 145% from a year earlier after the opening of the flagship Beijing-Shanghai high-speed line.

State-owned China North Locomotive and Rolling Stock Industry Corp. (CNR), which makes trains for the new link between the two cities, said net profit was around 1.60 billion yuan ($251 million) in the first six months.

CNR reported rapid increases in both its locomotive and passenger carriage businesses, it said in a statement to the Shanghai Stock Exchange.

Revenue from its high-speed train segment alone soared 190% year-on-year to 11.36 billion yuan in the first half.

The earnings period pre-dates a series of problems on the new Beijing-Shanghai line, which has been plagued by breakdowns since opening on June 30, and last month's deadly train crash near the eastern city of Wenzhou.

The accident, which killed at least 40 people, has caused the government to slash train services on high-speed rail links -- including the one between Beijing and Shanghai -- and analysts say train makers will be affected.

Earlier this month, CNR halted deliveries of bullet trains made by a subsidiary over problems with the braking system amid a nationwide safety review of China's high-speed network, the world's largest.

CNR has also withdrawn 54 trains from the Beijing-Shanghai line, and Chinese media has speculated that a crack in the axle of a train made by the company could be the "real reason" behind the recall. CNR has denied the claims.

CNR on Friday warned of technological and industry risk in future, but made no direct reference to the deadly accident in July, which has prompted Beijing to suspend approval of new rail projects and cut speeds on newly laid track.

"If the state's investment in railway and urban railway has a major cut ... this would have a negative impact on the company's operations," it said.

Another company, China South Locomotive and Rolling Stock Corp, manufactured the trains involved in the July accident.

Copyright Agence France-Presse, 2011

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