Yancoal Australia profit soars on higher coal prices, expanded operations
* Yancoal underlying net profit up four-fold to $621.75 mln
* Australian shares surge as much as 28 percent
* Profit jump comes in first full-year after acquisition
* Yancoal can adapt to China by selling into different
(Recasts with share move, adds CEO comments)
By Melanie Burton
MELBOURNE, Feb 26 (Reuters) - Shares in Yancoal Australia
Ltd jumped 28 percent on Tuesday after it reported a
more than four-fold rise in 2018 underlying net profit, boosted
by robust coal prices in its first full-year result since a
Yancoal said late on Monday net profit before one-off items
surged to A$868 million ($622 million) from A$211 million a year
earlier, on an 86 percent rise in revenues, and flagged higher
spending this year to improve efficiency.
"When we look at our share price we are clearly undervalued
and it does not reflect the company's current financial
strength," Chief executive Reinhold Schmidt told Reuters ahead
of the market open.
Shares in Yancoal, which is 62 percent cent owned by China's
Yanzhou Coal Mining Co Ltd, jumped 28 percent in
morning trade to a four-month hgh before settling at $3.60, up
12.5 percent by 1227 GMT.
Its Hong Kong-listed shares jumped 39 pct to HK$24.50, the
highest since listing in the city on Dec. 6, 2018.
Schmidt said Yancoal has not seen any major impact on its
customers following an informal ban on Australian coal imports
into a port in northern China, and slowdowns in unloading
Australian coal at other ports.
"Most of Yancoal's coal goes to the rest of Asia, not into
China. So we don't have any major pressure on us at all," he
"We know every year that there are some restrictions in
China. But we built a business model where we can work around
whatever occurs and move our coal to other countries," he added.
China's foreign ministry said on Friday that Australian coal
imports to the country continue as normal, although it added
customs authorities had stepped up environment and safety checks
on foreign cargoes.
Yancoal plans to invest in new fleets and operational
efficiencies across its open cut mines, and push forward with
its pipeline of Australian brownfield projects, focusing on the
Mount Thorley Warkworth and Moolarben operations.
The company, which bought the Coal and Allied suite of
Australian assets from Rio Tinto for $2.69 billion in June 2017,
expects capital expenditure in 2019 to rise to around A$285
million from A$210 million last year.
It forecast production of 35 million tonnes of saleable coal
$1 = 1.3961 Australian dollars)
(Reporting by Melanie Burton; additional reporting by Aditya
Soni in Bengaluru; Editing by Muralikumar Anantharaman and
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