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Higher tariffs charge up profit

Huaneng Power International Ltd, China's top listed electricity producer, said net profit more than doubled in the first quarter on higher tariffs even as demand fell.

Its net earnings jumped 127 percent to 549.9 million yuan (US$80.5 million), or 0.05 yuan a share, the utility said in a filing to the Shanghai Stock Exchange. That reversed a net loss of 3.9 billion yuan in 2008, its first annual loss, as tariff increases were not enough to offset soaring coal prices then.

"It's better than market expectations," said Hu Wenzhou, an analyst at BOC International, adding earnings could keep rising quarter on quarter as coal prices are low and on hopes of a rebound in power consumption later in the year.

Sales rose 19 percent to 16.1 billion yuan in the first three months.

The government raised power prices twice in the third quarter of last year after surging coal prices pushed several power utilities deep into the red. Although spot prices for coal have dropped after topping a record in July, this year's contract prices are still not set as negotiations between power firms and coal miners have been deadlocked, creating uncertainties over the outlook for the power sector.

Huaneng's generation fell 9.3 percent in the first quarter. It operates power plants in China and one in Singapore.

Huaneng shares fell 2.95 percent to 7.89 yuan yesterday after the quarterly results announcement. The Shanghai Composite Index dropped 2.94 percent.


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