Sinopec’s refining earnings plunged by about two‑thirds, dragging first‑quarter net profit down 28% to CNY13.3 billion, the company said. For the first half, net income fell 36% to CNY23.75 billion as weaker refining margins and deeper losses in chemicals offset an almost 7% rise in revenue; the company trimmed planned capital spending by roughly 5%, kept drilling steady and raised its second‑half oil‑processing target to 130 million tonnes.

Earnings and where the hit came from

Sinopec’s Q1 net profit of CNY13.3 billion was down 28% from a year earlier, the company said in its earnings report. Operating revenue rose about 6.9% to CNY735.4 billion in the quarter, but higher sales didn’t stop profits from slipping because margins and investment returns contracted.

  • Inventory impairment losses: CNY210 million in Q1 tied to lower oil prices.
  • Investment income: fell roughly 70% to CNY1.7 billion in the spring quarter.
  • Other hits: a CNY3.8 billion loss linked to hedging and weaker joint‑venture performance.
  • Business lines: refining earnings fell by about two‑thirds year‑on‑year; marketing and distribution profits tumbled; the chemical segment swung to a larger loss.

Prices, inventories and feedstock

Global crude weakness was central to the hit. Brent crude averaged roughly US$71 a barrel during the six months through June, down from about US$83 a year earlier, reducing the market value of the company’s inventories.

  • Inventory valuation reduced headline profit but lowered feedstock costs for refineries.
  • Domestic demand: Sinopec said domestic demand for refined oil fell about 4% year‑on‑year in Q1.
  • Realised oil price: slipped roughly 5.2% to about US$71.50 per barrel in the period reported.
  • Natural gas: self‑produced gas prices declined to CNY1.91 per cubic metre, weighing on upstream revenue.

Operations, demand shifts and capital plans

Sinopec pointed to structural shifts in fuel demand — including faster electric‑vehicle adoption — as a factor weighing on gasoline and diesel sales. Beijing’s emphasis on energy security kept drilling activity stable.

  • Upstream profit: CNY21 billion in the first half, down from CNY26.8 billion a year earlier.
  • Capital spending: trimmed the full‑year target by about 5% from an earlier plan of CNY164.3 billion; recorded CNY43.8 billion in capex in the first six months.
  • Processing and sales targets: processed 120 million tonnes in H1 and set a higher H2 processing target of 130 million tonnes; H2 sales target for refined oil products is lower than H1 sales.

Related Articles

Sinopec raised its H2 oil‑processing target to 130 million tonnes while trimming full‑year capex and holding drilling steady to manage softer transport‑fuel demand and lower crude prices.

This article was created with AI assistance.