Sinopec Kantons gains on cost cuts

Cost controls helped boost red-chip Sinopec Kantons Holdings' net profit despite a first-half turnover slump.

The crude oil trader from Guangdong registered a 10 per cent profit lift, to HK$111.34 million in the half.

International oil price fluctuation drove down turnover by 33 per cent, to HK$3.23 billion, managing director Zhai Xudong said.

'Global crude oil prices fluctuated greatly between the rock-bottom price of US$20 a barrel and the ceiling of about US$30,' Mr Zhai said.

He also attributed the lower turnover to Guangdong's high oil inventory as well as the global economic slowdown.

Operating profit fell 9 per cent year on year to HK$169.62 million.

Crude oil and petrochemical trading sales were down 37 per cent and 32 per cent respectively, year on year.

As well, it suffered a HK$1 million loss, due to unstable pricing mechanisms, in its investment in petrol station operations in the Pearl River Delta.

The company has scaled back expansion plans for this year.

It will increasing the number of petrol stations to 52, from the present 48, a reduction of eight on the original plan.

The company's largest earnings contributor was the transmission and storage of crude oil at its Huizhou jetty. It recorded a 23 per cent gain in net profit to HK$70 million.

Earnings per share were 10.74 HK cents, up from 9.8 HK cents a year earlier.

An interim dividend of 1.5 HK cents will be paid. Meanwhile, it is waiting for the necessary approvals to expand its earnings base by turning its Guangdong oil-storage facilities into a bonded zone.

This would enable international traders to deposit their crude oil there without paying customs duty and exporting it later - usually, in such a situation, to Japan, South Korea and Taiwan.

The company has plans to spend HK$140 million up to next year expanding crude-oil storage to 800,000 cubic metres, from the present 600,000 cu m.