Sinopec Corp. Recorded Significant Earnings Growth in the Third Quarter

Oct 29, 2013, 08:45 ET from China Petroleum & Chemical Corporation

BEIJING, Oct. 29, 2013 /PRNewswire/ -- China Petroleum & Chemical Corporation ("Sinopec Corp." or "the Company") (CH: 600028; HKEX: 386; NYSE: SNP; LSE: SNP) today announced its unaudited results for the nine months ended 30 September, 2013.

Financial Highlights:

  • In accordance with the China Accounting Standards for Business Enterprises ("ASBE"), the Company's operating income for the first three quarters of 2013 was RMB 2139.9 billion, up 5.7% over the same period of last year, and operating profit was RMB 74.71 billion, up 25.8% over the same period of last year. Net profit attributable to equity shareholders of the Company was RMB 51.6 billion for the three quarters, up 23% over the same period of last year. Net profit attributable for equity shareholders of the Company for the third quarter was RMB 22.18 billion, up 63.3% quarter on quarter. Basic earnings per share for the first three quarters were RMB 0.445, up 19.6% over the same period of last year.
  • In accordance with the International Financial Reporting Standards ("IFRS"), the Company's turnover and other revenue in the first three quarters of 2013 was RMB 2139.9 billion, up 5.7% over the same period of last year. Operating profit was RMB 78.29 billion, up 14.7% over the same period of last year. Profit attributable to equity shareholders of the Company was RMB 52.3 billion for the first three quarters, up 22.1% over the same period of last year. Profit attributable to equity shareholders of the Company was RMB 22.02 billion for the third quarter, up 61.7% quarter on quarter. Basic earnings per share for the first three quarters were RMB 0.451, up 19% over the same period of last year.

In the first three quarters of 2013, China's economy grew steadily with GDP up by 7.7% over the same period of last year. Domestic demand for oil products and chemical products continued to grow. The Chinese government further improved the pricing mechanism for oil products by implementing an adjustment of natural gas price and announcing the premium pricing policy for upgraded quality oil products. Based on the macroeconomic trends and market demand, the Company organised its operations with quality and efficiency being the top priorities for growth. It also promoted structural adjustment and change in the development model, while exercising strict control over costs and expenditures. All of these efforts contributed to the significant growth in operating results for the first three quarters of 2013.


Exploration and Production Segment

In exploration, the Company optimized exploration areas and made major breakthroughs in new blocks such as the Tarim Basin. The Company intensified its progressive exploration and oil reserve evaluation. Seven projects, including West Junggar, Tahe and East Shengli etc. as well as Daniudi Gasfield development have all been progressing smoothly. The Company accelerated the development of unconventional oil and gas and made major progress in the Fuling shale gas project. Positive progress was also made in the Southeast Sichuan marine facies shale gas evaluation. Development of coal-bed methane in South Yanchuan are progressing smoothly, with its production also growing steadily. During the first three quarters of 2013, the oil and gas production of the Company reached 330.8 million barrels of oil equivalent, up by 4.0% compared with the same period of 2012. However, due to factors such as the fall in international crude oil prices, the Exploration & Production Segment recorded an operating profit of RMB 46.74 billion, down by 15.5% compared with the same period of 2012.

Refining Segment

The Company adjusted its product mix in response to changes in market demand for domestic oil products, by producing more gasoline, jet fuel and other high-value-added products that are well received in the market. The Company optimized its operations through cost savings and efficiency improvements. The Company made every effort to upgrade oil product quality and considerably increased production of gasoline and diesel above GB IV standards, with an aim to prepare for premium quality oil products supply. The Company also enhanced the marketing of LPG, asphalt and paraffin by utilizing its advantage in specialization. In the first three quarters of 2013, refinery throughput was 174.19 million tonnes, representing a growth of 6.4% over the same period of last year. Benefiting from the government's implementation and improvement in the pricing mechanism for oil products, the operating profit of the Refining Segment swung into a profit of RMB 6.66 billion, as compared with an operating loss in the same period of 2012. Refining margins significantly improved to US$ 5.49/barrel, up 149.5% over the same period last year.

Marketing and Distribution Segment

In response to changes in supply and demand in the domestic market, and the implementation of the newly-announced oil products pricing mechanism, the Company endeavored to maximize its profitability and adjusted its marketing strategies by adopting differentiated marketing tactics. While increasing sales volume, the Company focused on the retail market and expanded retail sales volume by offering specialised services. The Company expanded the marketing of jet fuel and high standard oil products. It also strengthened quality management to ensure oil product quality, and promoted new businesses as well as non-fuel businesses, and actively explored the gas market. In the first three quarters of 2013, total sales volume of oil products increased to 134.64 million tonnes, up by 4.9% over the same period of last year. Total retail volume reached 84.82 million tonnes, representing an increase of 4.7%, and sales of non-fuel businesses reached RMB 10 billion, an increase of 20.5% compared with the same period of 2012. The operating profit of the Marketing and Distribution Segment was RMB 27.03 billion, representing a decrease of 10.5% over the same period of last year.

Chemical Segment

The Company further optimized the feedstock mix and cut feedstock costs by using a higher proportion of light feedstock. The Company optimized the operation and upgraded the technical and economical indicators. The Company strengthened its market analysis, the integration of R&D, production and marketing; optimized operations and utilization of facilities; and improved its product mix as well as promoted the development, production and sales of new products. The Company also improved its marketing approach and customer service, and reinforced supply-chain management. The Wuhan ethylene project was put into trial operation. In the first three quarters of 2013, ethylene production was 7.398 million tonnes, representing an increase of 5.3% compared with the same period of 2012. During this period, although facing the permissive market, the Company optimized the feedstock and product mix which helped to improve the operational profit of the segment. The Chemicals Segment recorded an operating loss of RMB 59 million in the first three quarters of 2013, representing an improvement of RMB 233 million as compared with the same period of 2012.

Capital Expenditure

The Company's capital expenditure amounted to RMB 86.95 billion in the first three quarters of 2013. Capital expenditure for the E&P segment was RMB 41.25 billion, mainly used for development in tight oil development in south Ordos, heavy oil development in west Shengli at shallow stratus, new blocks in the Tahe Oilfield, Yuanba and the Daniudi gas fields, and the Shandong LNG project. Capital expenditure for the Refining Segment was RMB 12.71 billion, used mainly for upgrading oil product quality and revamping projects in Wuhan, Anqing and Maoming etc. In the Chemicals segment, RMB12.76 billion was used for the construction of the Wuhan 800,000-tpa ethylene project, the Hubei syngas-to-MEG project and the Hainan aromatics project. Capital expenditure for Marketing and Distribution segment was RMB 17.36 billion, used mainly for developing and revamping service stations (including gas stations), the construction of refined oil product pipelines and depots, and for insuring safety and improving the environment. The Company added 671 new service stations (including gas stations) over the three quarters of 2013. A total of RMB 2.86 billion was used for Corporate and Other purposes, such as for R&D facilities and IT projects construction.

About Sinopec

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 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.


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.

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SOURCE China Petroleum & Chemical Corporation