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Eric Ng

PetroChina has narrowly retained its status as the most profitable Hong Kong-listed company, even though net  profit slid 22 per cent last year, its first decline since 2001.  
The country's largest oil and gas producer  expected 'severe challenges' this year and  was prepared for a long period of low oil prices and depressed fuel demand, vice-chairman Zhou Jiping  said yesterday.
'I  believe the economic downtrend, both globally and in China, is still ongoing,' he said. 'It will take more time to tell whether a bottom has been reached.'
 However, Mr Zhou said some pick-up in demand had been seen.  PetroChina's average daily fuel sales exceeded 250,000 tonnes last year, compared with a volume of under 200,000 tonnes that had  prevailed for some time.
The company posted a net profit of 114.43 billion yuan (HK$129.67 billion) based on international accounting standards, down 22.02 per cent from 146.75 billion yuan in 2007. 
This was just above Industrial and Commercial Bank of China's 110.84 billion yuan net earnings and China Mobile's 112.7 billion yuan.
PetroChina maintained its long-standing dividend payout ratio of 45 per cent,  declaring a final dividend of 4.64 HK cents per share.
Earnings  lagged the  124.61 billion yuan mean estimate by 20 analysts polled by Thomson Reuters. They projected this year's profit to fall further to 79.56 billion yuan.
The decline was partly  caused by a 40.63 billion yuan increase in taxes paid on oil revenue, as higher tax rates were applied as  energy prices  climbed. This was in addition to 8.61 billion yuan of inventory write-downs and 24.76 billion yuan of asset impairment charges.
Fourth-quarter net profit sank  33.6 per cent year on year to 27.2 billion yuan as a  dive in oil prices crimped profit. For the full year, operating profit from oil and gas production grew 15.76 per cent to 240.2 billion yuan. 
Refining losses ballooned to 82.97 billion yuan from 20.68 billion yuan on the back of state fuel price controls, even though the company received 15.69 billion yuan in government subsidies.
The company's chemical operations  reversed to a loss of 2.88 billion yuan from a profit of 7.83 billion yuan a year earlier as the global economic slump caused demand and prices to plummet.
To improve profitability, PetroChina plans to cut the cash cost  of lifting each barrel of oil by 5 per cent this year, after costs surged 11.7 per cent to US$9.48 per barrel last year.
It also plans to cut management costs 10 per cent at its headquarters and major  branches,  although it has no plans to lay off staff.
Despite the retrenchment, Mr Zhou said PetroChina  had budgeted 232.1 billion yuan  for investment this year on projects  that would  boost output growth, about the same as last year. The company believes oil demand and prices will surge again when the global economy recovers.



PetroChina still tops despite 22pc profit fall