Datang International Power Generation posted a 53.04 per cent jump in profit for the first half of this year, as higher power prices and lower coal costs more than offset the impact of lower plant utilisation and higher interest charges.
However, even with high expected power demand this second half, the company cautioned that profits would be pressured by low plant utilisation amid oversupply, uncertainty in coal prices and rising finance costs.
Datang, the dominant player in the Beijing-Datang-Tianjin area and which has a significant presence on the southeastern coast, posted a net profit of 722 million yuan (HK$818.8 million) for the first six months.
The amount is 3.8 per cent short of the 750.5 million yuan mean estimate of six analysts polled by the South China Morning Post.
Turnover grew 18.9 per cent to 20.68 billion yuan, thanks in part to an 11.2 per cent rise in its average power tariffs in the third quarter last year, offsetting a 1.51 per cent fall in power output to 61.31 billion kilowatt-hours.
Also helping the top line was a 10-fold jump in coal sales revenue to 2.12 billion yuan from 209.12 million yuan in the first half of last year.
Power generation operating margin rose to 6 per cent from 2.1 per cent mainly on a 3.6 per cent fall in coal cost per unit of output to 161.92 yuan per megawatt-hour. Fuel costs formed 63.3 per cent of its power and heat generation operating costs. But coal production operating profit fell to 63.24 million yuan from 189.47 million yuan on lower coal prices. Also pressuring the bottom line was a 25.9 per cent jump in interest expense even as interest rates have gone down, because the firm had to book more interest costs after a slew of its power plants came on stream.