中文
Profits of most listed coal companies in China have been declining since the start of this year, due to the downward trend in coal prices. Top coal miners are no exceptions, as showed their performance reports in the first three quarters.
The majority of listed coal giants, including China Shenhua Energy Co., Ltd. and Shaanxi Coal Industry Co., Ltd., have recently announced declines in profits over the first three quarters.
China Shenhua, the top company in the coal industry, achieved operating income of 252.47 billion yuan in the first three quarters, an uptick of 0.8% year on year, and net profits attributable to shareholders of 48.27 billion yuan, down 18.4% year on year, according to its quarterly report released late October 27.
China Shenhua ascribed the change in profits to three factors: 1) profit drop in coal segment resulted from price decline and increased production cost; 2) marked profit growth of power generation segment on decreased coal purchasing price and increased electricity sales; 3) increased income tax expense relative to the same period in 2022 due to last year's offset of excess income tax paid in previous years.
China Shenhua's income tax expense increased 25.9% on the year to 13.55 billion yuan in the first three quarters from 10.76 billion yuan last year, the company said.
The prices of long-term contract coal also decreased in the wake of declining market coal prices. During January-September, the annual term contract coal prices of the company fell from 516 yuan/t to 505 yuan/t, and the monthly term contract prices slid from 820 yuan/t to 818 yuan/t. Moreover, the spot coal prices dropped from 801 yuan/t to 621 yuan/t, while the average mine-mouth prices of coal decreased from 629 yuan/t to 583 yuan/t.
Shaanxi Coal, another major coal producer in northwestern China, experienced a slump in performance in the first three quarters. Its operating revenue came in at 127.43 billion yuan, down 2.41% from the preceding year, and net profits reached 16.18 billion yuan, down 44.56% year on year.
The company said that the main reasons for the decrease in net profits in the first three quarters were the downside fluctuations of coal prices and losses on the changes in fair value.
Shaanxi Coal's core business is coal mining, while railway shipment and other businesses account for a relatively small proportion of its revenue. Although the contribution of the investment sector to its revenue has been noticeable in recent years, the investment income for Shaanxi Coal fell 59.64% from a year earlier in the first three quarters of this year, mainly due to a decrease in the sale of trust assets investment compared to the previous period.
Other major coal firms also reported profit declines this year.
Yankuang Energy Group Co., Ltd. achieved operating revenue of 135.04 billion yuan in the first three quarters, down 20.15% year on year, and net profits attributable to shareholders were 15.53 billion yuan, falling 46.8% on the year.
Lu'an Environmental Energy Development Co., Ltd. said its operating revenue was 33.01 billion yuan in the first three quarters, a drop of 17.41% year on year; net profits attributable to shareholders were 7.27 billion yuan, down 21.57%.
In addition, Zhengzhou Coal Industry & Electric Power Co., Ltd., Shanxi Antai Group Co., Ltd. and Baotailong New Materials Co., Ltd. experienced steep declines in profits, with year-on-year decreases of 276.55%, 586.34%, and 120.08%, respectively.
The coal market usually experiences a typically favorable season in the fourth quarter, but this year may be an exception. Coal prices may decline further amid the continuous accumulation of coal in transit, warm temperatures and reduced demand from non-power sectors. This suggests that profitability of the listed coal companies is likely to continue the downtrend in the fourth quarter.
(Writing by Riley Liang Editing by Harry Huo)
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