Sinopec fires-quarter earnings drop to miss market target
China Petroleum & Chemical (Sinopec), the nation's second-largest oil and gas producer, posted a worse-than-expected 14.9 per cent decline in first-quarter net profit.
A 1.52 billion yuan (HK$1.88 billion) foreign exchange loss on the back of a weaker yuan, a 13.9 per cent rise in depreciation expenses to 21.2 billion yuan, and an 8.2 per cent jump in staff costs were behind the profit fall to 14.12 billion yuan. This compares with a 15.9 billion yuan average estimate of five analysts polled by Bloomberg.
Oil and gas production operating profit fell 18.7 per cent to 13.2 billion yuan due to a 3.5 per cent fall in average oil selling prices and higher production costs. Oil and gas output grew 8.8 per cent. Gas selling prices jumped 18.9 per cent.
Oil refining profit surged 69.6 per cent to 3.74 billion yuan while that of fuel distribution slid 3.2 per cent to 8.83 billion yuan.
Chemicals production fell into a loss of 1.34 billion yuan from a profit of 164 million yuan.
Sinopec said in February it would sell to non-state entities up to 30 per cent of its fuel distribution operation, which includes a network of 30,500 fuel stations - the world's largest.
Chairman Fu Chengyu said the stake would be sold by September 30, adding strategic investors would be given priority.
BNP Paribas head of Asia energy research Por Yong Liang said strategic investors would come from the convenience store sector since they could best help Sinopec lift its non-fuel sales that substantially lagged peers in developed nations.
Sinopec's first-quarter fuel distribution volume grew 0.05 per cent to 42.15 million tonnes while oil refining fell 2.5 per cent to 57.2 million tonnes.