Chinese firms warn of hit to bottom line as provinces introduce power cuts to meet energy consumption targets

Over 10 companies across several provinces said in exchange filings that the power shortages could affect production and consequently their profitability

Power cuts have been introduced because of a surge in electricity consumption, tightening coal supplies, as well as pressure on local governments to meet energy consumption targets before the year-end

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Several Chinese provinces have introduced power cuts that have affected the manufacturing plans of many companies. Photo: Xinhua

Yujie Xuein ShenzhenandMartin Choiin Hong Kong

Published: 7:02pm, 24 Sep 2021Updated: 10:32pm, 24 Sep 2021

Several mainland-listed companies have warned about the impact of the ongoing power cuts on their operations because of local governments’ need to meet their energy consumption targets, causing their share prices to plunge.

The companies’ warnings came amid a new wave of power rationing that started in at least 10 Chinese provinces, including the manufacturing hubs of Guangdong, Anhui, Zhejiang and Jiangsu over the past days, forcing factories to limit power usage or pause production.

As of Friday, over 10 companies, including those in Yunnan province and Guangxi autonomous region, said in exchange filings that the power rationing could cause production to stop and consequently affect their bottom line.

“The suspension and reduction of production will have a significant adverse impact on order fulfilment and product sales,” Jiangsu ChengXing Phosph-Chemical said in an exchange filing on Thursday. This, the company said, will have a significant adverse impact on its annual operating results.

Workers at an aluminium company in Xundian industrial estate in southwest Yunnan province, where power cuts have affected the operations of many companies. Photo: Xinhua

The yellow phosphorus manufacturer was forced to stop production at its four main facilities in Yunnan, Jiangsu and Guangxi, which accounted for nearly all of its operating income and net profit, the company said. Its share price fell 5.1 per cent to 7.13 yuan on Friday.