China Coal Energy Co., the nation’s second-biggest coal producer by market value, expects 2013 profit to slump as much as 65 percent because of falling coal prices and government effort to reduce reliance on the fuel.
The company, which posted a 8.84 billion yuan ($1.46 billion) profit in 2012, expects 2013 net income to drop by 55 percent to 65 percent under Chinese accounting rules, according to a Hong Kong stock exchange filing yesterday. It cited the “continuing downturn” in the coal market, a “constant decline” in prices, a slowing economy and changes in China’s energy strategy as reasons.
Coal prices fell 16 percent last year, according to data tracked by Bloomberg. The Chinese government pledged in March to take steps that include cutting coal consumption as part of an effort to reduce air pollution.
The nation, which relies on coal for about 70 percent of energy consumption, plans to cut that to less than 65 percent this year, according to a plan released by the National Energy Administration yesterday. That target was originally set for 2017, according to Helen Lau, an analyst at UOB-Kay Hian Ltd.
China Coal closed down 1.5 percent at HK$4.01 in Hong Kong trading yesterday. The stock has slumped 53 percent over the past year, compared with a 4.9 percent drop in the benchmark Hang Seng Index.
— With assistance by Jasmine Wang, and Sarah Chen