Sinopec sees soaring profits
China Petroleum & Chemical Corp (Sinopec), the world's third-largest oil refiner by capacity, expects first-quarter earnings to surge more than 50 per cent, after reporting a better than expected 30 per cent jump in net profit last year.
Thanks to increased output and higher sales prices, and a fourth-quarter turnaround of its refinery operation, net profit for the 12 months to December last year swelled to 53.91 billion yuan from a revised 41.46 billion yuan in 2005.
The Beijing-based company's share price climbed 3.48 per cent to HK$7.14 after it announced its results yesterday.
The profit beat by 7.8 per cent the 50.01 billion yuan mean estimate of 22 analysts surveyed by Thomson First Call.
Turnover at the mainland's second-largest oil and gas producer grew 29.3 per cent to a record 1.08 trillion yuan last year, driven by a 3.84 per cent growth in oil and gas output, the fastest in five years, and a 19.9 per cent jump in average crude oil selling price to US$56.53 a barrel.
Losses at the company's refining operation widened to 25.3 billion yuan from 3.54 billion yuan, but the segment turned in a 3.89 billion yuan operating profit in the fourth quarter after three quarters of losses, thanks to lower crude oil prices and stable refined fuel prices.
The company was also aided by a five billion yuan government subsidy to compensate for its refining losses due to Beijing's fuel price control policies implemented to contain inflation.
The company plans to increase oil output by 2.1 per cent to 291.1 million barrels this year, while gas production will be lifted 10.1 per cent to 282.5 billion cubic feet.
It also plans to raise capital investment 37.9 per cent to 110.1 billion yuan this year, with the biggest increment going to oil and gas exploration and production.
Further down the line, chairman Chen Tonghai said the company planned to speed up development of its Puguang gas field - the second largest by reserves in the mainland - by spending 63.2 billion yuan until 2010 on exploration and production there and laying a gas pipeline from the field in Sichuan province to Shanghai.
Production will begin before the end of next year, with annual output capacity of more than 10 billion cubic metres in 2009, rising to 15 billion cubic metres in 2010.
The 1,702km, 22 billion yuan pipeline with an annual capacity of 15 billion cubic metres is scheduled to be completed by the end of next year.
Mr Chen said the appraised proven reserves at the Puguang field, discovered in 2003, had risen to 356 billion cubic metres at the end of last year from 251 billion cubic metres a year earlier.
Sinopec offered a final dividend of 11 fen a share, compared with nine fen a year in 2005. That brings the dividend for last year to 15 fen per share, up from 13 fen in 2005, but the payout ratio has fallen to 24.1 per cent from 27.1 per cent.
