Benefits from higher selling prices were offset by a 6 per cent rise in production costs, to 117.6 yuan a tonne.

China Shenhua has integrated mining, railway, port and power operations. Last month, it set targets to raise coal output 2.8 per cent to 289.9 million tonnes, and grow sales 6 per cent to 410.5 million tonnes.

This is a marked slowdown from last year's output growth of 14.8 per cent and sales increase of 23.7 per cent, although China Shenhua's management said the targets were conservative and would probably be overshot.

Sanford Bernstein senior analyst Michael Parker predicted in a research report that mainland coal-demand growth would tumble to 195 million tonnes this year from 416 million tonnes last year, on the back of slower output growth in the power, steel and cement industries because of slowing economic growth. Industry accounts for 75 per cent of the nation's power consumption.

To boost profits amid weaker demand growth, rising production costs and weaker spot-market coal prices so far this year, China Shenhua planned to raise spot-market sales' contribution to 59 per cent of total sales this year, from 54 per cent last year. The shift would help shore up average selling prices, since spot prices are almost 50 per cent higher than contract prices.

Meanwhile, rival China Coal Energy, the listed unit of the nation's second-largest coal producer, China National Coal Group, reported a 14.6 per cent year-on-year rise in first-quarter net profit to 2.64 billion yuan.

Revenues grew 4.8 per cent to 21.92 billion yuan on the back of a 13.9 per cent rise in its mines' output, to 28.44 million tonnes, and a 5.3 per cent increase in average selling price, to 501 yuan per tonne. Production costs grew 7.1 per cent to 239 yuan a tonne.

The first-quarter profit represents 23.8 per cent of the average estimate for full-year net profit of 11.08 billion yuan, estimated by analysts polled by Thomson Reuters.