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Yanzhou Coal eyes further sales growth

Updated: 2011-03-29 06:56

By Emma An(HK Edition)

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Yanzhou Coal Mining Co expects to boost sales by 8.8 percent this year in volume terms amid strong demand, which helped the country's third-largest coal producer more than double its net profit last year.

Robust demand, coupled with rising coal prices, gave a big boost to the company's sales last year, lifting its revenue by 64.2 percent to 33.94 billion yuan in 2010 from the previous year. Net profit for the year surged 125 percent to 9.28 billion yuan.

The past year was marked by "historic breakthrough" in sales volume, according to Chairman Li Weimin.

"2010 recorded the best sales performance of the company," Li told reporters at a news conference on Monday.

The company sold a total of 49.63 million metric tons of coal in 2010, an increase of 30.6 percent from 2009. Sales at its Australian operations jumped 3.92 times year-on-year in volume terms amounting to 8.02 million metric tons for 2010, of which Felix Resources Ltd - an Australian coal miner bought by Yanzhou Coal for A$3.54 billion ($3.64) in 2009 - accounted for around 86 percent of the total.

For 2011, the company expects to sell 54 million metric tons of coal, 8.8 percent more than it sold in 2010, according to Li.

In line with the uptrend seen in the international and domestic markets, the selling price of coal at Yanzhou Coal grew by 25.4 percent year-on-year to average at 663.46 yuan per metric ton for 2010.

Economic recovery and rising demand, particularly from China and India, were cited by the chairman as the main factors behind the price rally. And the upward march may well continue in 2011, he added, with a new record likely to be set somewhere during the year.

"Coal prices will likely hit a new high this year," said Li.

Linus Yip, a strategist with First Shanghai Securities, sees "stable growth" for the price of coal going forward, citing strong demand as the mainland's economy charges ahead. Supply and demand will remain largely in balance, said Yip, only that "the demand growth is likely to turn out stronger".

Yanzhou Coal plans a capital expenditure of 5.1 billion yuan for 2011, up 43 percent from 2010. Part of the money will go to the construction of several plants the company bought in 2009 such as the massive coal field in Inner Mongolia. With a planned production capacity of 10 million metric tons of coal per annum, this project will be key to the company's growth, Li noted.

The rest of the money will be spent as the company scours the globe for possible acquisitions, according to Li.

The company is aiming to achieve "three-fold growth" in five years' time, which involves tripling the production volume of coal to 150 million metric tons and tripling the sales revenue to 100 billion yuan from the current levels.

The company proposed a final dividend of 0.59 yuan per share, up from 0.25 yuan per share a year ago.

China Daily

(HK Edition 03/29/2011 page3)

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