Huadian Power International Corp, the largest power producer in Shandong province, warned that it might post a full-year loss after an 874.08 million yuan (HK$992.52 million) third-quarter net deficit on high fuel costs and state control of power prices.
The third-quarter loss compared with a net profit of 354.84 million in the year-earlier period and a loss of 603.91 million yuan in this year's second quarter, based on mainland accounting standards. It brought the loss for the first nine months to 1.36 billion yuan, against a profit of 984 billion yuan a year earlier.
Third-quarter turnover grew 38.8 per cent to 8.27 billion yuan on the back of a 23.53 per cent rise in output, besides a 4.77 per cent average power price increase on July 1 and another 5.78 per cent increase on August 20.
'[The expected full-year loss was] a result of the continuous significant increase in the cost of power-station coal since the start of the year,' Huadian said in a statement.
Although Beijing lifted power prices twice between July and August, the increments were insufficient to offset losses.
'If the cost of coal used for electricity generation does not fall significantly in the remainder of this year ... the company is expected to suffer a loss for the full year,' Huadian said.