Sinopec Profit Surges on Chinese Fuel, Plastics Demand

(Bloomberg) -- China Petroleum & Chemical Corp., commonly known as Sinopec, returned to profit in the first half as the nation’s recovery from the pandemic boosted demand for the refiner’s transport fuels and plastics. 

• Asia’s biggest oil refiner posted a net profit of 40 billion yuan ($6.2 billion), compared with a loss of 21.8 billion yuan a year ago, the company said in a statement Sunday, using international accounting standards.
  • The company in July forecast net income of between 36.5 billion yuan and 38.5 billion yuan under Chinese accounting standards.

Key Insights

• Sinopec posted an operating profit of 39 billion yuan in its main refining business, compared to a loss of 31.7 billion yuan a year earlier, when pandemic disruptions peaked.
• The chemicals division posed a 13 billion yuan operating profit, compared to 3 billion yuan in the first half of 2020.
• Capital expenditure was 57.9 billion yuan in the first half, compared to 45 billion yuan the previous year, amid efforts to boost drilling to help ensure secure energy supplies.
• Sinopec plans to increase capital expenditure to 109 billion yuan in the second half

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• Its refineries processed 13.7% more oil in the first half compared with the same period the year before as rising fuel prices created attractive profit margins, the company said previously in an operational report.
• Oil and gas production increased 4.2% to 235.3 million barrels of oil equivalent, with crude output falling 1.5% and natural gas rising 13.7%. It plans to produce 141 million barrels of crude and 633.5bcf of natural gas in the second half.
• Sinopec’s second-half earnings will be supported by an uptick in oil-product demand, though the pace of growth may slow, according to Bloomberg Intelligence analyst Henik Fung.

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With assistance from Bloomberg