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Sinopec posts lowest half-year profit since 2008

Sale of fuels at state-controlled prices reduced refiner’s earnings

Gulf News

Hong Kong: China Petroleum & Chemical Corp., Asia’s biggest refiner, posted its lowest half-yearly profit since 2008 after the sale of fuels at state-controlled prices reduced earnings.

Net income declined 41 per cent to 24.5 billion yuan (Dh14.3 billion) from 41.17 billion yuan a year earlier, the Beijing-based company known as Sinopec said in a filing to the Shanghai Stock Exchange on Sunday. The result beat a median estimate of seven analysts compiled by Bloomberg that called for a profit of 22.9 billion yuan.

Sinopec’s profit slide follows a drop in earnings for larger rival PetroChina Co., which said it expects fuel pricing reforms in the second half to help cut losses from refining. Sinopec and parent China Petrochemical Corp. have announced more than $40 billion (Dh146.9 billion) in deals to acquire assets globally since 2009 to build up oil and gas production and diversify from refining.

“Sinopec somehow did a nice job in cost control because they can process less expensive low-grade crude in many refineries,” Gordon Kwan, Hong Kong-based head of energy research at Mirae Asset Securities Ltd, said. “Further upside in the second half will hinge on the pace of China’s domestic fuel pricing reforms and improvement in its upstream asset quality. Until then, it is likely Sinopec shares will lag behind rivals PetroChina and Cnooc.”

China’s three biggest oil companies have posted lower earnings in the first half. PetroChina’s profit dropped 6 per cent to 62 billion yuan, while Cnooc Ltd., China’s biggest offshore oil and gas explorer with no exposure to refining, said that net income declined 19 per cent.

Sinopec has declined 12 per cent in Hong Kong this year, while the benchmark Hang Seng Index has gained 7.8 per cent. The stock fell 2.6 per cent on Friday to close at HK$7.17.