Sinopec blames 41.6pc fall in first-half net on weak demand for its products

First-half net dives to 23.7 billion yuan but oil refiner expects state action to bring better days

PUBLISHED : Monday, 27 August, 2012, 12:00am
UPDATED : Monday, 27 August, 2012, 5:07am

China Petroleum & Chemical Corp (Sinopec) posted a 41.6 per cent drop in net profit for the first half on weaker demand for refinery products in its home market.

But demand is expected to recover in the second half as Beijing implements monetary policy to shore up the economy, Sinopec said in an announcement yesterday.

Net profit of the largest crude oil refiner on the mainland dropped to 23.7 billion yuan (HK$28.9 billion) for the six months to June, from 40.2 billion yuan a year earlier, mainly because of higher procurement costs of crude oil, which outpaced the increase in refinery product prices. Crude oil costs increased 13 per cent year on year to 458.8 billion yuan.

Sales grew 9.3 per cent to 1.35 trillion yuan on higher prices of crude oil and refinery products as the company is also a crude oil producer.

Earnings per share dropped to 27.3 fen from 46.4 fen.

Consumption of petrol, diesel and kerosene increased 3 per cent while the consumption of ethylene, the raw material for petrochemical products, rose 4 per cent, compared with 7.8 per cent gross domestic product growth on the mainland.

In the second half, the company plans to process 112 million tonnes of crude oil and sell 80 million tonnes of oil products, on par with the production in the first half.

It also expects to produce 4.63 million tonnes of ethylene, compared with 4.81 million tonnes in the first half.

Sinopec also plans to produce 163.75 million barrels of crude oil and 293.07 billion cubic feet of natural gas, which are similar to production in the first half.

Separately, Sinopec said it would invest 59 billion yuan to build a refinery in Guangdong.

Shares in the company fell 2.58 per cent to close at HK$7.17 on Friday.

Meanwhile, Sinopec Shanghai Petrochemical, which operates the second-largest refinery of Sinopec, slipped into a 1.29 billion yuan net loss before a non-recurring gain from a 1.39 billion yuan net profit previously. The non-recurring gain, at 103.68 million yuan, was mainly government grants.

The company blamed the poor results on weak demand, volatile international cruel oil prices and loss-making oil refining and chemical industries.