Yunnan Coal & Energy Co., Ltd. posted a wider net loss in the first half of 2026, as the coking sector remained under pressure from high raw material costs and weak downstream steel demand.

The company reported revenue of 2.85 billion yuan ($0.42 billion) in January-June, up 10.8% year on year, while the net loss attributable to shareholders widened to 249 million yuan from 163 million yuan a year earlier.

Operating cash flow plunged 71.58% year on year to 93 million yuan, mainly due to reduced settlement of maturing notes receivable, the company said in its interim report. Total assets stood at 8.25 billion yuan at end-June, with net assets attributable to shareholders at 2.29 billion yuan, down 9.90% from end-2025.

The company said its fundamental operating difficulties remained unchanged during the reporting period, citing industry cycles and cost pressures.

Operating costs rose 11.84% year on year to 2.90 billion yuan, outpacing revenue growth and further compressing margins. Administrative expenses surged 44.23% to 113 million yuan, mainly due to higher employee resettlement costs. Asset impairment losses reached 23 million yuan, while credit impairment losses exceeded 100 million yuan.

The wider loss stems from a cyclical downturn and structural adjustment in the industry. Tight supply of upstream coking coal kept prices firm, raising production costs, while downstream steel mills cut output under crude steel reduction policies, leaving coking plants squeezed between high costs and weak demand.

The company suspended production at its wholly-owned subsidiary Shizong Coking to curb losses, which reduced marginal losses but triggered fixed-asset impairment risks and hefty employee resettlement costs.

Its heavy machinery subsidiary, Heavy Equipment Group, continued to post losses with negative net assets, exposing the company's claims and investments to recovery risks.

The company also faces contingent liability risks from finance lease guarantees for Shizong Coking, having already made partial rent payments on its behalf, with potential further payments and related litigation and asset freeze risks ahead.