Sinopec posts 41% decline in net profit in first half

China Petroleum & Chemical Corp. (Sinopec), China’s largest refiner, posted a 41% drop in first-half net profits to CNY23.7 billion (US$3.7 billion) for the six months of this year to June, from CNY40.2 billion (US$6.3 billion) a year earlier, mainly because of the higher procurement costs of crude oil, which outpaced the increase in finished product prices. Sinopec’s crude oil costs rose 13% to CNY458.8 billion (US$72.3 billion).
Sinopec Chairman Fu Chengyu said that in pursuit of steady economic growth, and to push infrastructure investment as well as domestic consumer spending, China is expected to implement several fiscal and monetary policies in the second half.
“Given these macro-control policies to be in place in the second half of 2012, we expect the domestic demand for refined oil products and chemicals will steadily increase, which provides favorable conditions for the company to scale up business operations,”
He also said the company plans to refine 112 million metric tons in the second half of this year, slightly higher than the 109.76 million tons in the first half. In early August, Beijing raised gasoline prices by 4.5% and diesel prices by 4.7%. However, analysts said that in the second half of this year, Sinopec will most likely remain under tremendous pressure as demand for oil products is expected to remain weak with the anticipated slowdown in China’s economic growth to about 7.6%. (August 26, 2012)