Huaneng warns of output challenge
Mainland power firm says it is being squeezed by increased supplies of clean energy rivals and anti-pollution controls on its coal-fired plants
Huaneng Power International said it faced rising competitive pressure from surging deliveries of clean energy from western regions after posting a lower-than-expected annual net profit.
The listed unit of the mainland's largest power producer, China Huaneng, said because its generating units were mainly in coastal eastern and southern regions, where coal-fired power plants' output has been subject to tight control as part of measures to control air pollution, its output growth was facing challenges.
"Not only that, with the commissioning of large amounts of hydropower units, and various ultra-high-voltage power lines for delivering power from western to eastern regions, eastern regions' coal-fired plants' room for generation is being squeezed," Huaneng said in its annual results statement to the Shanghai stock exchange.
The company reported a net profit of 10.4 billion yuan (HK$13 billion) for last year based on international accounting standards, 89.1 per cent higher than the 5.51 billion yuan in 2012 but 8.8 per cent lower than the average 11.4 billion yuan forecast of 26 analysts polled by Thomson Reuters.
Revenue was 133.8 billion yuan, flat from 2012, as a 5 per cent rise in power output was offset by lower power selling prices.
Huaneng aims to raise output of its mainland plants by 2.4 per cent this year, compared to national demand growth of 6.5 to 7 per cent forecast by industry association China Electricity Council, reflecting rising competitive pressure.
Meanwhile, China Longyuan Power, Asia's largest wind power generator, saw its share price plunge 13.8 per cent to HK$7.93 yesterday after Monday's posting of a 21 per cent fall in net profit for last year to 2.05 billion yuan, a third less than analysts forecast.
Longyuan president Li Enyi said the profit fall was due mainly to a 492.6 million yuan asset impairment on two biomass power plants that failed to source plant waste economically. It aims to turn around two other loss-making plants this year.
A 216 million yuan jump in maintenance expenses was also blamed, after the expiry of wind turbine warranties. Li said suppliers only provided basic maintenance before the expiry so Longyuan had to pick up the slack.
Personnel costs surged 190 million yuan after it gave better incentives to staff including those in remote locations.
Profit was propped up by a 327 million yuan gain from selling shares in rivals Huaneng Renewables and China Datang Corp Renewable Power.
Industry regulator National Development and Reform Commission said in its work report at the National People's Congress session this month that wind power prices would be "adjusted at a suitable time".