China Coal set to post its biggest profit fall in a decade in 2014
Source: www.chinamining.org Citation: Reuters Date: February 2, 2015
China Coal, the country`s second-largest coal producer, expects its net profit to fall by as much as 85 percent, which would be its biggest earnings drop in 10 years as the sector is hit by persistent oversupply exacerbated by a slowing Chinese economy.
China Coal Energy Co Ltd`s 2014 net profit is expected to drop 75-85 percent as a continued downturn of the sector pushes prices lower, it said in a statement to the Hong Kong stock exchange on Friday.
In 2013, the coal producer posted a net profit of 3.58 billion yuan ($572.85 million).
The fall marks the steepest since 2005, according to Thomson Reuters data. The company first went public in Hong Kong in 2006 and has issued profit growth figures dated back to 2005.
China Coal`s profit warning follows a slew of smaller rivals expecting sharp earnings falls in 2014, they said this week.
Zhengzhou Coal Mining Machinery Group Co Ltd , Henan Dayou Energy Co Ltd, Shaanxi Coal Industry Co Ltd and Shanxi Xishan Coal and Electricity Power all expect profit for 2014 to fall by at least 70 percent.
Shanxi Coal International Energy Group Co Ltd, Taiyuan Coal Gasification Co Ltd and Henan Shenhuo Coal & Power Co Ltd expect to swing into the red, blaming weak prices due to the supply glut.
"The trend of coal oversupply and falling prices has not changed due to easing economic growth," Henan Dayou said in a Chinese-language filing to the Shanghai stock exchange.
Spot coal prices from Qinhuangdao port have dropped further to 518 yuan a tonne, after falling by about 15 percent in 2014.
China`s coal production is estimated to have fallen 2.5 percent in 2014, the first annual drop in more than a decade due to the fight against pollution and government efforts to tackle a supply glut as demand from industry and the power sector weakens.
The China Coal Industry Association also estimated that profits of coal mines fell 44 pct in first 11 months of last year, and that 70 percent of them made losses over the period. ($1 = 6.2495 Chinese yuan renminbi)
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