China Resources Power net profit marginally up

Updated: 2011-08-22 17:27

(Wall Street Journal)

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HONG KONG — China Resources Power Holdings Co on Monday reported a marginal 1 percent increase in its first-half net profit, as higher fuel costs eroded the impact of an increase in power output, the Wall Street Journal reported.

Net profit for the six months ended June 30 was HK$2.48 billion ($319 million), up from HK$2.46 billion a year earlier.

The power company, a unit of State-owned China Resources National Corp, said it expects power consumption growth in China to remain strong in the second half of the year, even though coal prices will remain relatively high.

The Hong Kong-based power producer plans to increase the production of coal from its own coal mines, especially from Shanxi province, to offset rising coal costs.

"We anticipate that coal production volume from our own coal mines, as well as coal consumption volume from our own coal-fired power plants, will continue to increase in the future years," Chairman Song Lin said in the statement.

As part of its efforts to secure coal supply, China Resources raised its first-half total coal output by 63 percent to 7.7 million metric tons.

Revenue rose 37 percent to HK$29.03 billion from HK$21.16 billion as the company's first-half electricity output grew 24 percent to 53.79 million megawatt hours.

However, higher fuel costs whittled down the company's net profit. China Resources Power said its average fuel costs per unit rose 11.7 percent in the first half, and fuel costs accounted for 69 percent of its total operating costs during the period.

Most of China's power producers reported a sharp fall in earnings during the first-half, mainly due to a surge in coal costs, which more than offset high growth in power generation and tariff hikes in the second quarter.

In the first half, China's spot thermal coal price rose 15 percent on year, but power producers won't be able to pass all the rising coal costs on to grid operators or consumers due to China's reluctance to loosen caps on power prices.

The blue-chip power producer recommended a first-half dividend of HK$0.06, unchanged from last year.