March 13, 2018 / 1:42 PM / 3 months ago

China's Huaneng Power profit drops sharply on high coal prices

SINGAPORE, March 13 (Reuters) - Huaneng Power International Inc, the listed arm of one of China’s biggest power generators, reported an 82.7 percent fall in its net profit for 2017, logging the second straight year of declines due to high coal prices.

Huaneng Power’s net profit came in at 1.79 billion yuan ($282.92 million) in 2017, down from 10.38 billion yuan a year earlier, based on a Shanghai stock exchange filing according to Chinese accounting standards.

The profit fall was steeper than the 36.1 percent decline in 2016 and the worst showing since 2008, according to Eikon data based on company filings.

In a separate statement, Huaneng Power said it had set aside asset impairment provisions of 1.18 billion yuan in 2017 and planned to issue 34.3 billion yuan worth of domestic and offshore debt financing tools over the next two years to help boost its working capital and fund investments.

“In 2017, high coal prices put a lot of pressure on the company’s operations,” Huaneng Power said in the filing.

“With the continued cuts in obsolete capacity in the coal industry in 2018 due to the government’s policy, we face some challenges in the supply of resources as there could be regional constraints and limitations from time to time.”

The 2017 financial results came after the Hong Kong and Shanghai markets closed. Huaneng Power’s Shanghai shares fell 0.86 percent, lagging the Shanghai composite index’s 0.46 percent drop, while its Hong Kong shares were down 0.57 percent, compared to a 0.02 percent gain in the Hang Seng Index .

$1 = 6.3268 Chinese yuan renminbi Reporting by Lee Chyen Yee in SINGAPORE and Meg Shen in HONG KONG; Editing by Jane Merriman

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