Half Year 2019 Yanzhou Coal Mining Co Ltd Earnings Presentation (Chinese, English)
HK Aug 3, 2020 (Thomson StreetEvents) -- Edited Transcript of Yanzhou Coal Mining Co Ltd earnings conference call or presentation Monday, September 2, 2019 at 1:30:00am GMT
TEXT version of Transcript
* Xiangqian Wu
Yanzhou Coal Mining Company Limited - Director
Investors, good morning. Welcome to Yanzhou Coal Mining Company Limited's Interim Results Announcement 2019. Let me introduce our management on stage. In the center, we have Managing Director, Mr. Wu Xiangqian. Next to him, we have Director and CFO, Mr. Zhao Qingchun; Secretary to the Board, Mr. Jin Qingbin; Director of the Finance Department, Mr. Xu Jian; and Marketing and Logistics, General Manager, Mr. [Marsella] from Yancoal, Australia.
Today first of all, Mr. Wu will present the company's first half results, his views about the market and outlook for the second half of the year. After that, there will be a Q&A session. You are most welcome to ask questions.
Now let me pass the floor to Mr. Wu.
Xiangqian Wu, Yanzhou Coal Mining Company Limited - Director 
Ladies and gentlemen, good morning. First of all, welcome, everyone, to the 2019 interim results announcement of Yanzhou Coal Mining Company Limited. Thank you very much for your interest, support and trust in the company over years.
Now my presentation will be divided into 3 parts. Part one, operation review for the first half. In the first half, there is restriction to the release of coal production volume, and there is also more and more requirement on safety and environmental protection. However, we had been working hard to pursue reform and transformation and innovation in order to enhance our efficiency. So our scale had increased, and then our development had come faster.
In order to share with shareholders the development results of our company and to express our gratitude to shareholders for the long-term support, the Board proposed that in the first half of the year, we will pay special dividend of -- in the total amount of RMB 4.912 billion, including tax. In other words, it is RMB 1 per share.
Now I will report to you our first half results in 6 areas. In the first half of the year, sales of salable coal comparing with same period of last year is more or less the same. However, we had put in place a full range all around management and control, and we managed to control costs. We continue to optimize the product structure and enhance efficiency and lower costs. We enjoy economies of scale and as a result, we achieved the best level in history.
In the first half, sales revenue was CNY 33.24 billion, up 10-point -- or an increase of CNY 1.02 billion, up 3.2% year-on-year. Profit before tax, CNY 9.16 billion, an increase of CNY 710 million or 8.5%. Net profit, CNY 5.81 billion, an increase of CNY 1.19 billion or 25.8% year-on-year.
Number two, our financial condition continues to improve. We paid close attention to offshore and onshore financial and capital market changes. And while we need to satisfy our production and development needs, we also put in place measures to lower financial leveraging and to improve our asset structure. In the first half of 2019, our operating activities generated cash -- net cash of CNY 8.38 billion. EBITDA was CNY 13.88 billion. And at the end of the year, we have cash in hand, CNY 23.37 billion, and there is adequate cash flow.
Interest-bearing debt decreased CNY 7.84 billion. Comparing with the beginning of the year, finance cost was down 30.1%, so our deleveraging efforts had borne results. So we had achieved the promise that we made to the capital market at the beginning of the year.
Number three, very effective sales and marketing. In the first half of the year, because of supply and demand situation in the coal market being more relaxed, we continued to optimize our results, and we made precise judgment of the market situation. We were flexible in adjusting our sales and marketing strategy, so we have achieved good results.
Now the point is we increased clean coal and coal blending, and we decreased coal slurry. We achieved sales of clean coal of 8.53 million tonnes, up 19.2% year-on-year. And this share, for the first time, exceeded 50%, and there is an increase in revenue by CNY 1.07 billion.
Coal blending, the sale of coal blending was 6.4 million tonnes, an increase of 110 million. We optimized our technology and also streamlined our process, so the percentage of coal slurry decreased 235,000 tonnes, and we are able to achieve our synergy. As a result, the burning of coal slurry by our power plant increased 224,000 tonnes.
So at the same time, we increased the proportion of long-term scale and also direct supply. And for the first time, in the -- within the province, long term accounted for a share of 66% and above. This is the first time direct supply also accounted for 87% of sale. For Inner Mongolia, direct sales -- direct supply accounted for a share of 43%.
In the first half of the year, for self-produced coal, ASP was CNY 550.56 per tonne, an increase of CNY 18.99 per tonne or 3.6%.
In the first half of the year, for clean coal, average selling price was CNY 845.47 per tonne, up CNY 67.87 per tonne or 8.7%, an increase in revenue of CNY 588 million.
Number five, lean management and control. In the first half, we managed costs effectively. In terms of staff costs, controllable expenses, finance costs and selling expenses, we continued to enhance our cost control measure, so we are able to offset the impact from reduction of production volume in some mines. And we achieved our promise made at the beginning of the year to the capital market that the per tonne cost of coal sold will not increase more than 5%.
In the first half of the year, we attach importance to long-term developments and seize policy opportunities. And we also stepped up and expedited our work in the 3 mines in Inner Mongolia. For Zhuang Longwan coal mine, the annual capacity increased from 5 million to 10 million tonnes. For Shilawusu mine, it's already entered the joint test production stage. For Ying Panhao coal, it had received the approval from NDRC. Wanfu mine, it's actually commenced production according to schedule. For Yulin Neng Hua and Ordos, high-end industrial parks, well, they are also in schedule. And for these 2 projects, trial run can start in November 2019.
We attached importance to the building of a transport network. For the (inaudible) coal port expansion project, well, the annual turnover of throughput can rise from 4 million tonnes to 10 million tonnes. And there is also Ying Panhao coal mine railway and the transport station, Shilawusu transport system and so on. On the other hand, we will make sure that we can release the added value from coal to enhance the overall economic benefits.
Part 2, market analysis of key products. So we will talk about our analysis and judgment concerning coal and methanol market in the second half of the year. Well, this year, the Chinese economy is moving in a positive way, amidst instability. In the first half of the year, mainland coal market is such that supply growth slowed down, and demand is better than expectation. So there is a balance between demand and supply. Coal price is in the mid-to-high range, and profitability in the industry is steadily improving. Because the increase in coal production is limited and in the downstream, there is stable demand from the industry for imported coal policy and also other situation, there is tightening. So it is expected that in the second half, supply and demand will be at the balance.
In Q2 2019, methanol price was affected by the demand and supply changes and also the accumulation of social inventory. As a result, there was a coming down trend. And there are also trade frictions and also methanol downstream product capacity utilization volatility, so it is expected that in the second half of the year, mainland methanol market will see a weak balance in the supply and demand situation. And methanol price will be fluctuating in the low range.
For our development strategies, we will have clear strategic positioning. We'll focus on principal business development. We'll improve organization of production and show higher quality and higher efficiency. We'll optimize product mix. We aim for higher quality and higher returns, and enhance cost control, hoping to achieve very high-quality development.
So overall speaking, these are our measures. First of all, we will focus on principal business developments. We will optimize our industrial layout and extend our industrial chain, increase our value-added and enhance our overall core competitiveness and sustainability.
Number two, we will optimize our production organization and make sure that we can increase volume and efficiency. For the headquarters, we will attach importance to equipment and use less manpower, and we would like to enhance safety and quality.
For the Inner Mongolia base, we will focus on the 10 million tonne grade mine to make sure that the capacity can be released. We want to make sure that in the second half of the year, raw coal production volume can increase.
Number three, Australia. We'll continue to relaunch the good development trend to do a good job in optimizing the inventory and seize opportunities for development.
Number three, we will optimize product mix to enhance quality. We want to improve our own market competitiveness and operation.
Now we will focus on clean coal. So we will enhance the informatization and automation for coal washing technology. We want to enhance our own market share in terms of traditional clean coal, so that we are able to achieve better results.
Number two, we will attach to our product customization strategy. We'll make good use of our production base, different product mix and also our transportation channels. We will enhance our quality improvement measures to make sure that within the year, we are able to complete the 10 million tonne or above production capability scheme.
Number three, we will attach importance to the strategy to reduce volume of low-quality coal.
And number four, we will enhance cost control to achieve better results.
Now as for those specific measures, first, we will deepen the ability to save the use of materials and material consumption, equipment consumption, energy consumption and so on. So we will put in place all the necessary control measures. And secondly, we will reduce the use of manpower. We'll put in place safe informatization system, smart system and automation system to make sure that we can use less manpower, and we want our system to be highly reliable. We will strengthen our system and mechanism reform.
And number three, we will dig deeper into the capabilities to lower cost. We'll make use of big data and AI and other high-tech in order to achieve budget management -- good budget management and strengthen material procurement, production process, marketing and sales and so on.
Ladies and gentlemen, the first half of the year is an important moment for us to achieve our yearly targets, so we are moving towards high-quality development. This is a very critical period. We will continue to stabilize production volume, control costs, expand revenue, adjust our structure and improve our efficiency. We have a lot of confidence, and we will do our best to fight the battle. We will reform and innovate, and we will adhere to high-quality developments. So in this way, we hope that we are able to pay back to shareholders and we will not fail our society. And we will fail -- we won't fail to live up to the expectation of those who are caring for us.
Thank you very much. So please continue to pay attention to our development in the second half of the year. And you are most welcome, all the new friends, to visit us and give us your guidance. Thank you very much.