China Petroleum & Chemical Corporation Announces 2012 First Quarter Results

BEIJING, April 26, 2012 /PRNewswire-Asia-FirstCall/ -- China Petroleum & Chemical Corporation ("Sinopec" or "the Company") (CH: 600028; HKEX: 386; NYSE: SNP; LSE: SNP) today announced its unaudited first quarter results for the three months ended 31 March, 2012.

Financial Highlights:

• In accordance with the PRC Accounting Standards for Business Enterprises ("ASBE"), in the first quarter of 2012, the Company's operating income increased by 14% year-on-year to RMB671.365 billion. Net profit attributable to equity holders of the company decreased by 37.42% year-on-year to RMB12.829 billion and the basic earnings per share was RMB0.148. In accordance with the International Financial Reporting Standards (IFRS), in the first quarter of 2012, the Company's turnover, other operating revenues and other income amounted to RMB671.365 billion, increased by 14% over the same period last year. Operating profit amounted to RMB21.81 billion in the first quarter, and net profit attributable to the shareholders of the company amounted to RMB13.41 billion, down by 35.04% from the same period last year. Basic earnings per share was RMB0.154.
• Within Sinopec's fully integrated businesses, exploration & production business recorded a significant growth in operating profit and marketing & distribution segment's profitability remained stable. Due to the record high international crude oil price since 2008 financial crisis and domestic tight control over the price of refined oil products, refining segment recorded serious operating losses. At the same time, under the impact of factors such as the rise in the price of chemical raw materials such as naphtha and sluggish price of global chemical products, the operating profit of chemicals segment decreased. Even the refining segment recorded significant operating losses, in order to ensure market supply of oil products, oil refining facilities of the Company are under full-load operation, providing customers and farmers with high quality oil products and services.

Business Highlights:

• Exploration and Production Segment - The Company recorded solid growth in the output of crude oil and natural gas. Crude oil output amounted to 81.53 million barrels, an increase of 4.47% from the same period last year. Natural gas output amounted to 143.18 billion cubic feet, an increase of 11.77% over the same period last year.
• Refining Segment - The throughput of crude oil amounted to 55.4104 million tons, an increase of 2.13% over the same period last year. The output of refined oil amounted to 32.8676 million tons, an increase of 5.01% over the same period last year.
• Marketing and Distribution Segment -  Domestic sales of refined oil increased by 3.20% over the same period last year to 38.265 million tons. Of this, retail sales accounted for 26.185 million tons, an increase of 8.40% from the same period last year.
• Chemicals Segment - In the first quarter, the output of ethylene and synthetic resin totaled 2.4551 million tons and 3.4316 million tons respectively, a decrease of 3.86% and 2.14% respectively from the same period last year.
• Capital expenditure for the first quarter of 2012 amounted to around RMB18.388 billion.

In the first quarter of 2012, China's economic growth rate began to slow, with the year-on-year GDP growth rate falling to 8.1%. With a range of factors, including geopolitical developments, contributing to the record high international crude oil price since 2008 financial crisis, domestic demand for refined oil and chemical products increased, albeit at slow rate. During the quarter, the Company made important progress in a number of key strategic areas. These include optimizing the product mix, expanding the market to increase turnover, highlighting production safety, and promoting energy-saving initiatives and emissions reduction, and as a result, the output of oil and gas, the volume of processed crude oil and sales volume of petroleum products have achieved relatively steady increase. Under the impact of negative factors such as domestic tight control over the price of oil products, refining segment recorded serious operating losses. At the same time, affected by the rise in the price of chemical raw materials such as naphtha and sluggish price of global chemical products, the operating profit of chemicals segment decreased. Operating profit amounted to RMB21.81 billion in the first quarter, and net profit attributable to the shareholders of the Company amounted to RMB13.406 billion, down by 28.99% and 35.04% respectively from the same period last year.

RESULTS REVIEW

Exploration and Production Segment

In the first quarter, the Company made great efforts to increase the output of crude oil and natural gas. Progress was made in the exploration of unconventional oil/gas resources, such as the Yuanba continental facies, middle/shallow strata exploration and tight oil reservoirs. In addition to exploring unconventional resources, the Company was focused on four other key domestic projects in the Tarim Basin, Sichuan Basin, Ordos Basin, and Shengli Oil Field. The Company has also made steady progress in increasing production capacity at the Dawan and Yuanba blocks. In the first quarter, the Company recorded solid growth in the output of crude oil and natural gas. Crude oil output amounted to 81.53 million barrels, an increase of 4.47% from the same period last year. Natural gas output amounted to 143.18 billion cubic feet, an increase of 11.77% over the same period last year. In the first quarter, the exploration and production segment recorded operating profit of RMB19.551billion, an increase of 48.75% over the same period last year.

Refining Segment

The Company was focused on optimizing its purchasing processes, managing the transportation and allocation of crude oil, ensuring safe and stable operations at its oil refining facilities during high demand periods, and ensuring sufficient oil production for the spring ploughing and planting season. In the first quarter, the throughput of crude oil amounted to 55.4104 million tons, an increase of 2.13% over the same period last year. The output of refined oil amounted to 32.8676 million tons, an increase of 5.01% over the same period last year. Due to a substantial rise in the price of crude oil and high-level price fluctuations, tight restrictions on the pricing of refined oil products for the domestic market, and to ensure sufficient supply of refined oil products, the Company's oil refining facilities are currently operating at full capacity. As a result, the oil refining business has incurred a significant operating loss of RMB9.172 billion.

Marketing and Distribution Segment

The Company was focused on strengthening its capabilities in the allocation and transportation of resources, and ensuring that resources were appropriately allocated for the spring ploughing and planting season. To achieve these targets, the company leverage advantages in systems management, its marketing network and recognized brand value, and its innovative non-fuel business model. In the first quarter, the domestic sales volume of oil products amounted to 38.265 million tons, an increase of 3.20% over the same period last year. Of this, retail sales volume accounted for 26.185 million tons, an increase of 8.40% from the same period last year. In the first quarter, the operating profit of the marketing and distribution segment reached RMB10.277 billion, an increase of 12.15% from the same period last year.

Chemicals Segment

In line with its focus on operational efficiency, in the first quarter the company strove to adjust its plant operation load, raw material and product structure, and increase the output of functional and high value-added products. In the first quarter, the output of ethylene and synthetic resin totaled 2.4551 million tons and 3.4316 million tons respectively, a decrease of 3.86% and 2.14% respectively from the same period last year. The operating profit of the chemicals segment amounted to RMB1.309 billion in the first quarter, a decrease of 85.94% over the same period last year. Operating margins were affected by factors such as an increase in the price of chemical raw materials such as naphtha and sluggish price of global chemical products.

Capital Expenditure

In the first quarter, the Company's capital expenditure amounted to around RMB18.388 billion. Of this, RMB6.312 billion was used in the exploration and production segment for the Shengli shallow water oilfield, the Northwest Tahe oilfield, the Ordos oil and gas fields, the exploration and development of the Sichuan Basin gas field and the Shandong LNG project. RMB2.864 billion was used in the refining segment, primarily in upgrading the quality of diesel oil, refinery revamping projects at Sinopec Shanghai Petrochemical and Jinling Petrochemical Companies, and the construction of Huangdao-Lanshan crude oil pipelines. RMB2.557 billion was used in the chemicals segment, mainly for the construction of a facility in Wuhan producing 800,000 tons per annum of ethylene, the Yanshan butyl rubber project and the Yihua 1,4-butylene glycol project. RMB6.340 billion was used in the marketing and distribution segment, mainly for the construction and acquisition of service (gas) stations, refined oil pipelines and oil depots in key areas such as highways, core cities and newly planned regions, as well as in other regions. These stations will promote the non-fuel businesses and the IC card value-added services. 380 new service (gas) stations were established during the quarter. RMB315 million was used in scientific research and information for headquarters and other capital expenditures, primarily related to the construction of the R&D facilities and IT projects.

Appendix

Highlights of Results

About Sinopec Corp.

Sinopec is one of the largest integrated energy and chemical companies with upstream, midstream and downstream operations in China. Its principal operations include: the exploration and production, pipeline transportation and sales of petroleum and natural gas; the sales, storage and transportation of petroleum products, petrochemical products, synthetic fiber, fertilizer and other chemical products; import & export, as well as import and export agency business of oil, natural gas, petroleum products, petrochemical and chemical products, and other commodities and technologies; and research, development and application of technologies and information.

Adhering to its corporate mission of "Enterprise development, Contribution to the Country, Shareholder value creation, Social responsibility and Employee wellbeing", Sinopec Corp. implements strategies of resources, markets, integration, internationalization, differentiation and green low-carbon development with a view to realize its vision of building a world first class energy and chemical company.

Disclaimer

This press release includes "forward-looking statements". All statements, other than statements of historical facts that address activities, events or developments that Sinopec Corp. expects or anticipates will or may occur in the future (including but not limited to projections, targets, reserve volume, other estimates and business plans) are forward-looking statements. Sinopec Corp.'s actual results or developments may differ materially from those indicated by these forward-looking statements as a result of various factors and uncertainties, including but not limited to the price fluctuation, possible changes in actual demand, foreign exchange rate, results of oil exploration, estimates of oil and gas reserves, market shares, competition, environmental risks, possible changes to laws, finance and regulations, conditions of the global economy and financial markets, political risks, possible delay of projects, government approval of projects, cost estimates and other factors beyond Sinopec Corp.'s control. In addition, Sinopec Corp. makes the forward-looking statements referred to herein as of today and undertakes no obligation to update these statements.

SOURCE China Petroleum & Chemical Corporation