China Resources Power plugs into constant profit

PUBLISHED : Thursday, 09 June, 2011, 12:00am
UPDATED : Thursday, 09 June, 2011, 12:00am


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China Resources Power Holdings defied higher coal costs and belated power price rises to keep profit in the first five months on a par with last year. Wang Xiaobin, chief financial officer of the fourth biggest and most profitable Hong Kong-listed mainland power producer, attributed the stable profit to higher coal output, operating efficiency and wind power production. 'Year to date, our profit has been stable and has even slightly improved from the same period last year,' she said. The company posted a net profit of 2.46 billion yuan (HK$2.95 billion) in last year's first half. Wang said part of the reason for its better performance compared with the industry in general was that about 60 per cent of its power-generating capacity was in provinces facing tight power supply, meaning its power plants enjoyed higher utilisation and lower fixed costs per unit of output. In the seven months to April, more than half the nation's power plants ran at a loss. That was despite Beijing granting power plants in most provinces a temporary price increase of about 0.5 per cent earlier this year. It was followed by a formal power price increase of 13-29 fen per kilowatt hour in 12 provinces from April 10, and an increase of 20 to 22 fen in three other provinces from June 1. The increases average 5 per cent. Wang said China Resources' average power price rose only 2.7 per cent because most of the company's assets were in coastal regions where better profitability meant lower power price increases. She said coal procurement cost rose 16 per cent on a per-tonne basis in the first four months of this year but the fuel cost per unit of output rose only 10 per cent as a result of cost control measures. Even though coal cost rises outweighed the extra revenue from power price increases, Wang said the company was able to keep its profit stable in the year's first five months on a year-on-year basis because of higher coal output and upgrading facilities to improve efficiency. It aims to produce 19 million tonnes of coal this year, mostly in Shanxi and some in Jiangsu, Henan and Hunan provinces, up from 11.4 million tonnes last year. Last year's output failed to meet the company's target of 16 million tonnes because of delays in restarting production at mines closed for overhauls. Higher output from wind farms also raised the profit of China Resources, which plans to add at least 800 megawatts of wind farm capacity annually in the next few years from 642 MW at the end of last year. Its total capacity was 19,358 MW at the end of last year. 18b yuan The estimated amount, in yuan, China Resources Power plans to spend this year to expand production capacity