Huaneng warns of output challenge

Huaneng Power International said it faced rising competitive pressure from surging deliveries of clean energy from western regions after posting a lower-than-expected annual net profit.

The listed unit of the mainland's largest power producer, China Huaneng, said because its generating units were mainly in coastal eastern and southern regions, where coal-fired power plants' output has been subject to tight control as part of measures to control air pollution, its output growth was facing challenges.

"Not only that, with the commissioning of large amounts of hydropower units, and various ultra-high-voltage power lines for delivering power from western to eastern regions, eastern regions' coal-fired plants' room for generation is being squeezed," Huaneng said in its annual results statement to the Shanghai stock exchange.

The company reported a net profit of 10.4 billion yuan (HK$13 billion) for last year based on international accounting standards, 89.1 per cent higher than the 5.51 billion yuan in 2012 but 8.8 per cent lower than the average 11.4 billion yuan forecast of 26 analysts polled by Thomson Reuters.

Revenue was 133.8 billion yuan, flat from 2012, as a 5 per cent rise in power output was offset by lower power selling prices.

Huaneng aims to raise output of its mainland plants by 2.4 per cent this year, compared to national demand growth of 6.5 to 7 per cent forecast by industry association China Electricity Council, reflecting rising competitive pressure.