Coal costs cut into Huaneng's profit
Updated: 2011-03-31 11:22
By Wang Ying (China Daily)
Net income tumbled 32% in 2010, says power firm's earnings report
BEIJING - Huaneng Power International Inc, a unit of China's biggest power producer, posted a 32 percent decline in profit last year, missing analysts' estimates, as the company paid more for coal to generate electricity.
Net income fell to 3.35 billion yuan ($511 million), or 0.28 yuan a share, from 4.93 billion yuan, or 0.41 yuan, the previous year, the company said in a filing to the Hong Kong Stock Exchange on Tuesday. That's less than the 4.07 billion yuan mean forecast of 16 analysts in a survey compiled by Bloomberg. The utility didn't report fourth-quarter figures.
China controls electricity tariffs to contain inflation while the average benchmark price for power-station coal for immediate delivery at Qinhuangdao, Hebei province, rose 25 percent last year. About 73 percent of the nation's power is produced by coal-fired generators, according to the China Electricity Council.
"Coal prices remain at high levels and there is still a possibility of tight coal supply during certain periods in some regions, which will bring about new challenges to the stable fuel supply and control of fuel costs," according to the statement. Huaneng Power paid 67.9 billion yuan to purchase coal last year, an increase of 51 percent from 2009, it said.
In 2011, "China faces various new challenges including maintaining stable and relatively rapid economic development, managing inflation expectations and adjusting economic structures," Huaneng said. "The short-term uncertainty of the national economy will affect the growth of power demand."
Net income this year may be 4.72 billion yuan, according to a mean estimate of 16 analysts. Huaneng increased power generation by 26 percent last year to 257 billion kilowatt-hours, the company said in a statement on Jan 18. The power producer's board of directors recommended a cash dividend of 0.2 yuan a share for 2010, it said.
Huaneng's shares retreated 0.88 percent on the Shanghai Stock Exchange on Wednesday.
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