China Shenhua's Q1 revenue and profit both declined, with coal sales down 15.3% year-on-year | Financial Report Insights

China Shenhua's performance in the first quarter of 2025 was under pressure, with revenue decreasing by 21.1% year-on-year and net profit declining by 18%. Coal sales volume fell by 15.3% year-on-year; power generation decreased by 10.7% year-on-year; and self-owned railway transportation turnover dropped by 11.6% year-on-year.

The company attributed the revenue decline to “the decrease in coal sales volume and average selling price leading to a reduction in coal sales revenue; the decrease in electricity sales volume and average selling price leading to a reduction in electricity sales revenue.”

On the 25th, China Shenhua released its first quarter report for 2025:

• The company's operating revenue in the first quarter was 69.585 billion yuan, a year-on-year decrease of 21.1%;
• Net profit attributable to shareholders of the listed company was 11.949 billion yuan, a year-on-year decrease of 18%;
• Net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses was 11.705 billion yuan, a year-on-year decrease of 28.9%;
• Basic earnings per share were 0.601 yuan/share, a year-on-year decrease of 18.0%.

In terms of core business:

• Coal sales volume was 99.3 million tons, a year-on-year decrease of 15.3%;
• Power generation was 50.42 billion kilowatt-hours, a year-on-year decrease of 10.7%;
• Self-owned railway transportation turnover was 72.5 billion ton-kilometers, a year-on-year decrease of 11.6%.

In terms of prices, the average selling price of coal (excluding tax) was 506 yuan/ton, a year-on-year decrease of 11.5%; the average selling price of electricity was 386 yuan/megawatt-hour, a year-on-year decrease of 5.6%.

Revenue and profit both decline, industry chain under pressure

China Shenhua's performance in the first quarter of 2025 was significantly under pressure, with both revenue and net profit experiencing double-digit declines.

Specifically, coal sales volume was 99.3 million tons, down 15.3% year-on-year, with purchased coal sales volume dropping sharply by 40.4%; the average selling price of coal fell by 11.5% year-on-year to 506 yuan/ton, further compressing revenue space.

At the same time, the company's power generation business was also under pressure, with total power generation of 50.42 billion kilowatt-hours, a year-on-year decrease of 10.7%; electricity selling price decreased by 5.6% to 386 yuan/megawatt-hour. The transportation sector was affected by a chain reaction, with self-owned railway transportation turnover decreasing by 11.6%, and shipping business cargo volume dropping sharply by 35.3%.

Coal business: Profit resilience amid structural optimization

Despite facing a dual decline in revenue and sales volume, the coal segment still demonstrated some profit resilience. In the first quarter, the coal segment achieved operating revenue of 51.6 billion yuan (before consolidation offsets), a year-on-year decrease of 25.7%; total profit was 10.1 billion yuan, a year-on-year decrease of 16.6% It is worth noting that the gross margin of the coal segment reached 30.1%, an increase of 1.2 percentage points year-on-year, mainly due to the company's optimization of its sales structure.

From the sales structure perspective, China Shenhua actively adjusted its sales strategy, with the proportion of annual long-term contract sales increasing from 49.9% to 63.9%, a year-on-year increase of 8.5%; at the same time, it significantly reduced lower-margin spot sales, with spot sales declining by 71% year-on-year.

It is noteworthy that the average production cost of self-produced coal has increased to 195.8 yuan/ton, a year-on-year increase of 2.3%. The rise in costs mainly comes from increases in labor costs (up 6.7% year-on-year) and repair costs (up 15.5% year-on-year).

Under Multiple Pressures, Power Generation and Transportation Businesses Face Challenges

In the first quarter, the power generation segment achieved operating revenue of 20.854 billion yuan (before consolidation offsets), a year-on-year decrease of 14.7%; total profit was 2.625 billion yuan, a year-on-year decrease of 17.2%. The gross margin of the power generation business fell to 15.4%, a decrease of 1.3 percentage points compared to the same period last year. It is worth mentioning that the average utilization hours of the company's power generation units were 1,063 hours, a year-on-year decline of 13.4%.

In terms of costs, the unit selling cost of electricity for the power generation business decreased by 3.1% to 353.7 yuan/MWh, mainly benefiting from the decline in coal procurement prices, but this cost advantage was offset by falling electricity prices and reduced power generation.

The transportation sector also faces challenges, with profits in the railway, port, and shipping segments all declining to varying degrees. Among them, the shipping business saw a total profit decrease of 69.6% year-on-year, becoming the most significantly declining segment among the three transportation businesses, mainly affected by structural adjustments in the shipping business and a decrease in freight volume.

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