Electric power giants' profit dragged down by energy costs
Updated: 2008-03-29 10:51
China's four leading electric utilities companies released their annual reports to the country's two stock markets this week, saying their 2007 profits were largely affected by soaring energy costs.
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The decline came despite increasing demand for power as Huadian generated 70.27 billion kilowatt hours of electricity in 2007, up 40.46 percent.
The company said that the decline was mainly caused by higher prices for coal, its main fuel source.
The overall cost, including crude material costs, taxation and other fees, was 16.53 billion yuan last year; coal accounted for 69.93 percent of the total cost, according to the report.
Revenue for Huaneng Power International Inc, the listed arm of China Huaneng Group, was 50.44 billion yuan, up 13.5 percent. Its gross profit slid 8.37 percent year on year to stand at 7.39 billion yuan.
The company said it was exposed to increasing coal prices and ocean shipping fees at the end of last year and the beginning of this year, something caused by the energy strain.
Huaneng generated 173.69 billion kilowatt hours of electricity in 2007, representing a growth of 13.21 percent.
Sichuan Chuantou Energy Stock Co Ltd in China's energy-rich Sichuan Province, realized revenue of 362.57 million yuan, up 13.51 percent.
Its gross profit was 80.65 million yuan, up 8.84 percent year-on-year, but the company said it was still under high pressure from rising energy costs.
The revenue of Anhui Province Energy Group Co Ltd's was 2.64 billion yuan, a 19.05 percent increase over the previous year. The gross profit stood at 123 million yuan, up 8.56 percent.
It generated 8.8 billion kilowatt hours of electricity in 2007, up 11.75 percent from the previous year.
"Rising energy prices and transportation expenditures have added to power companies' costs," said a market analyst.
China experienced its most severe winter in five decades starting in mid-January. This had caused a critical shortage of energy resources in the country's south.
Zhang Yong, vice director of policy research department with China National Coal Association, said the country was aiming for annual growth of 200 million tons in its coal output. "The coal industry has the full ability to meet domestic demand," he added.
China, the world's largest producer and consumer of coal, saw its economy expand by 11.4 percent last year. The consumption of coal, which generates about 80 percent of the country's power, rose 7.9 percent to 2.58 billion tons.