Coal India Q1 profit rises 61% to ~38 billion
Coal India posted a 61 per cent rise in its net profit to ~37.86 billion for the quarter ended June 30, on the back of increased sales and rise in coal prices. The net profit in the same quarter of the last fiscal year was ~23.51 billion. The firm missed Street estimates, which was hoping for a net profit of over ~42 billion.
Backed by an increase in sales, particularly to the power sector, and a hike in coal prices at its e-auctions, Coal India posted a whopping 61 per cent rise in its net profit to ~37.86 billion for the quarter ended June 30, 2018.
The net profit in the same quarter of the last financial year stood at ~23.51 billion.
The miner missed Street estimates that had predicted the company’s net profit in excess of ~42 billion.
Nevertheless, the steep rise in profitability came despite the company provisioning ~1.99 billion for its executive employees whose salary was revised earlier.
According to a company executive, e-auction prices rose over 13 per cent on a sequential basis to touch ~2,399 a tonne, which had a significant improvement on its profitability. During the quarter ended March 31, 2018, e-auction prices stood at ~2,112 a tonne.
“Although e-auction isn’t a large revenue contributor, the premium from such auctions directly impacts profitability of the company and is on the rise,” the Coal India executive said.
During April-June this year, the coal monolith sold 19.41 million tonnes (mt) of coal in the auctions, which translated into an earning of ~46.57 billion.
Its total revenue, aligned to the new accounting standards after the roll-out of GST, stood at ~254.71 billion as against the earning of ~217.74 billion in the year-ago period.
In January this year, the world’s largest coal miner had hiked non- coking coal prices by an average of nine per cent, which not only covered increased expenses of nearly ~60 billion as a result of wage hikes, but also provided the headroom to step up capital expenditure for mining operations.
On the other hand, its employee benefit expenses rose 18.90 per cent to ~95.98 billion, while the payout to contractual workers and contracted equipment rose 2.52 per cent at ~31.76 billion.
To improve productivity from its existing mines, Coal India is working towards further mechanisation of mines, but company officials say that it will not lead to job losses.
“The role and nature of work may change as mechanisation progresses,” a second company official said. Interestingly, the company has been able to curtail its finance costs, which dipped by 8.33 per cent to ~1.10 billion.