March 24, 2016 / 2:00 PM / 3 years ago

UPDATE 1-China Shenhua Energy's profit falls, to cut output in 2016

(Adds details in paragraphs 1, 4-5, 7-8)

BEIJING, March 24 (Reuters) - China Shenhua Energy’s net profit fell 56.9 percent in 2015, missing forecasts and dropping for a third straight year due to lower demand in a slowing economy and the country’s efforts to switch to cleaner forms of energy.

The listed arm of the Shenhua Group, China’s biggest coal producer, said in its annual report demand for coal and other fossil fuels was likely to fall further in 2016, with the pace of restructuring in the energy sector expected to accelerate and the global economic recovery still lacking strength.

“We predict coal prices will remain at a low level, losses among coal enterprises will worsen, some coal mines will cut or suspend production and output for the whole year will steadily drop,” the firm said.

In 2015, Shenhua Energy’s net profit was 16.14 billion yuan ($2.47 billion), down from the previous year’s 37.4 billion yuan, it said in a filing to the Shanghai stock exchange.

That came in lower than analysts’ average forecast of 20.1 billion yuan, according to Thomson Reuters data. The coal producer has seen its annual net profit decline since 2013, with the fall widening each year.

China’s coal sector has been hit by a sustained downturn in demand and a price-sapping capacity glut, forcing big state producers to cut output last year.

Shenhua Energy produced 280.9 million tonnes of coal in 2015, down 8.4 percent on the year, and its target output for this year is expected to fall 0.3 percent to 280 million tonnes, it said in its results filing.

It also expects its 2016 revenues to drop 18 percent to 145.1 billion yuan.

Sales volume in 2015 fell 17.9 percent to 370.5 million tonnes, it said. Output from its coal-fired power stations fell 3.6 percent to 210.45 billion kilowatt hours.

The efforts of big state miners to cut output brought nationwide production down 3.5 percent to 3.68 billion tonnes, but it did little to gee up the market.

Prices of coal at the port of Qinhuangdao in Hebei province SH-QHA-TRMCOAL have gained 5.4 percent so far this year, but they remain around 20 percent lower than the same period of 2015.

The government said in February it would aim to close 500 million tonnes of coal mining capacity in the coming three to five years, but the country’s total capacity surplus has been estimated at more than 2 billion tonnes.

$1 = 6.5110 Chinese yuan Reporting by David Stanway in Beijing and Lee Chyen Yee in Singapore; Editing by Susan Thomas and Mark Potter

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