China National Coal Group, the nation's second-largest coal supplier, said profit surged 85.9 per cent year on year in the first quarter to a record 1.44 billion yuan due to higher output. The profit amounted to 26.9 per cent of the company's target of 5.34 billion yuan for this year. It did not specify whether the profit figures are before or after taxes. Turnover was12.95 billion yuan, flat from the first quarter of last year, as a 23.1 per cent growth in coal production to 24.63 million tonnes was offset by lower sales of coal sourced from third parties. Coal production commands a much higher profit margin than coal trading. The mainland's coal producers benefited from a 15.5 per cent growth in first-quarter power generation to 701.17 billion kilowatt-hours, compared with an 11.1 per cent growth in the same quarter a year ago, according to China Electricity Council figures. Power demand was driven by the country's 11.1 per cent economic growth in the first quarter and higher output in power-hungry sectors such as steel and aluminium smelting, which was fuelled by a 25.3 per cent growth in fixed-asset investment. China National Coal is the parent of Hong Kong-listed China Coal Energy, which last week announced a 5.1 per cent decline in last year's net profit to 3.17 billion yuan due to expiry of preferential profit tax treatments. China National Coal, a state-owned enterprise under the direct supervision of the central government, has set a target to raise coal output by 10.9 per cent to 100.5 million tonnes this year, while China Coal Energy aims to lift its production by 40 per cent to 80 million tonnes. China National Coal also said its coking coal output grew 33.9 per cent year on year to 1.16 million tonnes in the first quarter as methanol production surged 48.1 per cent to 33,000 tonnes. Coking coal is used in steel smelting while methanol is a chemical and fuel derived from coal, crude oil or natural gas. China Coal Energy's share price dropped 1.4 per cent yesterday to close at HK$7.77.