China Shenhua Energy Co Ltd, the world's second-largest coal producer by reserves, posted a lower-than-expected 12 percent rise in 2006 net profit as higher costs and lower overseas coal sale prices pared gains from volume and domestic price growth.
China's top coal producer made a net profit of 17.46 billion yuan ($2.26 billion), lagging expectations of 18.5 billion yuan, the mean forecast from 18 analysts polled by Reuters Estimates. Earnings per share were 0.965 yuan, up from 0.937 yuan a year ago, it said in a statement late on Friday.
China - the world's top coal producer and consumer - became a net importer of coal in January after record-high domestic prices curtailed shipments abroad and fuelled an influx of the commodity. Analysts say Shenhua should enjoy the full benefit of a price rally on coal in China this year, when its new contracts kick in.
Surging domestic demand and Beijing's policy of shutting small and polluting coal mines have boosted prices of the fossil fuel in the country since the fourth quarter of 2006.
Shenhua stepped up mining to fuel power plants and steel mills across the world's fourth-largest economy, and sold 18.5 percent more coal in 2006 at 171.1 million tonnes. The integrated coal-based energy firm also said its total power output dispatch rose 42 percent in 2006 to 51.7 billion kilowatt hours.
Its export sales last year fell 5.4 percent to 9.64 billion yuan due to lower prices in the international coal market, resulting in a decrease in the prices under long-term sale contracts with certain major customers compared with 2005.
An appreciation of the yuan and the reduction in export tax rebate to 8 percent from 13 percent May 2005 also affected overseas sale prices in 2006, it added.