Coal India profit misses estimates as glut weighs down on prices

Kolkata: Coal India Ltd, the world’s biggest producer of the fuel, missed analysts’ estimates for fourth-quarter profit as oversupply of the fuel and lower international prices trimmed earnings.

Net income for the three months ended March 31 rose to Rs42.5 billion (Dh2.33 billion, $634 million) from Rs42.4 billion a year earlier, the state-run monopoly said in a stock exchange filing on Sunday. The profit lagged a mean estimate of Rs45.5 billion from 22 analysts compiled by Bloomberg. Coal deliveries during the period rose 7.8 per cent to 145.2 million metric tonnes.

A drop in sales per tonne Rsto 1,429.5 from Rs1,542 a year ago ate into the Kolkata-based miner’s earnings, offsetting growth in deliveries. A glut caused by the company’s record output last year and a decline in global prices also proved a drag on profit. Sales in the three months were flat at Rs207.6 billion, compared to Rs207.7 billion in the previous year, the company said.

Power producers, Coal India’s biggest customers, are struggling to use all their capacity, as cash-strapped regional power retailers curtail purchases. The miner, which has a target to almost double its annual output to 1 billion tonnes in four years, is counting on demand from power utilities following government measures to turn around the indebted retailers.

The company produced 165.2 million tonnes of coal during the quarter, the most ever in a quarter. In April, however, it cut output and deliveries for the first time in 15 months, as inventories piled up. It will increase prices by about 6.29 per cent from May 30, the company said in a separate statement.

Coal India’s shares rose 0.2 per cent to Rs281.30 on Friday in Mumbai. The stock has declined 15 per cent this year, compared with a 2 per cent gain in the benchmark S&P BSE Sensex.