December 02, 2008

Yanzhou Coal H1 profit up by 4.8% YoY

Yanzhou Coal Mining Company, a unit of China's 4th largest coal producer, said that its first half profit rose 4.8% after sales and prices increased. Yanzhou, based in the eastern province of Shandong in a statement to the Hong Kong stock exchange said that its net income in H1 of 2007 climbed to CNY 1.50 billion (USD 198 million) from CNY 1.43 billion in H1 of 2006 and sales increased by 13% YoY to CNY 6.70 billion.

Yanzhou said that ”The economic development of the People's Republic of China is maintained at a rapid rate which results in strong demand for coal by primary industries. It average sales price in the first half of 2007 increased by 12.9% YoY to 390.1 per tonne. The average domestic coal sales price rose by 20% YoY to CNY 395 per tonne. The average export price dropped by 20% YoY to CNY 336.15.

Yanzhou said China is changing from a net coal exporting country to an importer and this will increase domestic supply. Still, enhancements to China's railway system have failed to end bottlenecks that restrict coal supplies. Its cost of sales and railway transportation jumped 28% in the first half. It said that China is for the first time aware of the importance in energy saving and CO2 emission reduction which will accelerate the consolidation of the coal industry. This will enhance the competitive advantage of large scale coal companies.

The company forecast slightly tight' global supplies in the rest of 2007. It said “Global coal supplies will be slightly tight in the second half with prices of the fuel to rise amid constraints on shipments from Australia and increased imports by China and Japan.”