Datang shrugs off past woes, expects return to profit by year-end

Datang International Power Generation is confident of returning to profitability by December, shrugging off high costs that have caused losses in the past two quarters.

Speaking after the opening of the 17th Conference of the Electric Power Supply Industry, Datang chairman Zhai Ruoyu said the company was taking measures such as cutting fuel consumption per unit of output and signing more long-term procurement contracts, to help lessen the impact of the higher price of coal.

'I think we will be able to return to the black before the end of the year, but the degree of improvement will depend on whether there is a further power price increase,' Mr Zhai said. 'But the same cannot be said for our parent company, China Datang Group.'

His comment came a day after the largest power producer in the Beijing-Datang-Tianjin area warned that its net profit might plunge about 85 per cent this year, compared with a profit of 3.41 billion yuan (HK$3.86 billion) last year.

The company posted a net loss of 432.86 million yuan for the third quarter, even after the average price for its power rose 5.23 per cent on July 1 and a further 5.7 per cent on August 20.

Its per-tonne coal procurement cost surged 35 per cent year on year in the third quarter, according to a Citigroup research report.