Bloomberg News

Yanzhou Coal Third-Quarter Profit Drops 70% on Currency Loss

October 21, 2011

(Updates with foreign-exchange loss in third paragraph.)

Oct. 21 (Bloomberg) -- Yanzhou Coal Mining Co., China’s fourth-biggest producer of the fuel, posted a 70 percent drop in third-quarter profit from a year earlier because of foreign- exchange losses.

Net income dropped to 1.1 billion yuan ($172 million) from 3.7 billion yuan a year earlier, the Shandong-based company said in a statement to the Hong Kong Stock Exchange today.

Yanzhou, which bought Australia’s Felix Resources Ltd. for A$3.1 billion ($3.2 billion) in 2009, reported a 1 billion-yuan foreign-exchange loss in the third quarter after the Australian dollar fell 10 percent against the U.S. currency during the period. The Chinese coal producer posted a 1.8 billion-yuan foreign-currency gain a year earlier.

“It’s payback for what it gained from last year,” said Helen Lau, a Hong Kong-based mining analyst at UOB-Kay Hian Ltd. “Everyone in the market had been expecting the exchange loss.”

Production of raw coal rose 9.2 percent in the third quarter from a year earlier to 14.4 million metric tons, the company said in the statement. Output gained 11 percent in the first nine months to 40.1 million tons.

The shares have slumped 24 percent in Hong Kong trading this year, compared with the 22 percent drop in the benchmark Hang Seng Index. Yanzhou rose 0.7 percent to close at HK$18.10 today, before the earnings announcement.

--Editor: Ryan Woo.

To contact the reporter on this story: Guo Aibing in Hong Kong at aguo10@bloomberg.net

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net.


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