Shenhua slashes investment budget as net drops

China Shenhua Energy, the listed unit of the mainland's largest coal producer, Shenhua Group, has cut its capital investment budget by 19 per cent after posting a 21.6 per cent year-on-year drop in third-quarter net profit.

The firm cited "changes in the external investment and operating environment" and project approval progress for the revision of its overall budget for capacity expansion to 54.5 billion yuan (HK$69 billion) from 67.5 billion yuan announced in March.

All the cuts are related to its coal-mining and logistics operations, including a 38.4 per cent reduction to 10.9 billion yuan in spending on new mining capacity and a 20.4 per cent decline to 27.9 billion yuan in spending on logistics - covering expenditure on railways, ports and shipping.

But expenditure on power generation has been revised up by 10 per cent to 14 billion yuan, China Shenhua said. This comes as the firm unveiled lower profit from coal mining and better profit from power production.

Net profit dropped to 9.43 billion yuan for the quarter to September from a year earlier, based on international accounting standards. For the first nine months, net profit declined 11.5 per cent to 34.3 billion yuan.

The nine-month decline was driven mainly by an 8.6 per cent fall in the average selling price of self-mined coal. Sales were up 2.9 per cent.