Sinopec 2016 First Quarter's Net Profit Increases Over 200% YoY

BEIJING, April 28, 2016 /PRNewswire/ -- China Petroleum & Chemical Corporation ("Sinopec Corp." or the "Company")(HKEX: 386; SSE: 600028; NYSE: SNP) today announced its unaudited results for the three months ended 31 March 2016.

Financial Highlights：

• Amid low oil prices, the Company's mid- and down-stream segments became the main profit growth drivers. Operating profits from Refining, Marketing and Distribution, and Chemical segments all recorded significant growth compared to the same period last year, reflecting its integrated advantages.
• In accordance with the International Financial Reporting Standards (IFRS), the Company's operating profit was RMB 13.06 billion, up by 153.4% year-on-year. Profit for the period was RMB 9.56 billion, increased by 267.7% year-on-year. Net profit attributable to owners of the Company was RMB 6.66 billion, increased by 206.8% year-on-year. Basic earnings per share (EPS) were RMB 0.055.
• In accordance with China Accounting Standards for Business Enterprises (ASBE), the Company's operating profit was RMB 12.31 billion, significantly increased by four fold year-on-year. Net profit was RMB 9.03 billion, increased by 355.8% year-on-year. Net profit attributable to equity shareholders of the Company was RMB 6.19 billion, increased by 267.1% year-on-year. Basic earnings per share (EPS) were RMB 0.051.
• The Company's financial position continued to improve during the first quarter. In accordance with IFRS, the Company's net cash flow from operating activities was RMB 34.35 billion, increased by 414.0% year-on-year. Net cash used in investing activities decreased RMB 11.81 billion compared to same period last year. Cash and cash equivalents at the end of the first quarter was RMB 63.15 billion. Liabilities-to-assets ratio at the end of the first quarter was 43.11%, down by 2.55 percentage points from the year end of 2015.

Business Review:

In the first quarter of 2016, focusing on the growth of quality and profitability, the Company intensified its evaluation of macro-economy and market trends and actively responded to these changes. The Company emphasised on reform and innovation, stringent management and tight coordination of all aspects of work.

Exploration and Production:

Through projects optimization and implementation of a flexible investment decision-making mechanism in response to oil price fluctuations, the Company reduced its high-cost oil production. In exploration, the Company actively carried forward high-efficiency exploration activities, making a number of discoveries in Sichuan Basin, Ordos Basin, and Central Tahe Basin. In terms of development, the Company achieved steady progress in development of Fuling shale gas field (phase II), optimised development programs in mature oilfields and increased development in frontier acreages. In the first quarter, the oil and gas production of the Company was 114.7 million barrels of oil equivalent, declined by 2.7%, out of which crude oil output down by 9.3% while natural gas up by 16.7%, compared with the same period last year. Impacted by the sustained low crude oil prices, Exploration and Production Segment had an operating loss of RMB 12.53 billion.

Refining:

The Company adjusted the product mix in response to market demand by increasing production of gasoline and kerosene, maintained safe and stable refinery operations and upgraded refined oil products quality as scheduled. The Company optimised resource allocation, controlled costs and took advantage of its strong economies of scale. By tapping well-established advantages in specialisation, the Company improved its profit margins in LPG, etc. In the first quarter, refinery throughput decreased by 2.4% and refined oil products production dropped by 1.4%, among which gasoline up by 4.7%, jet fuel up by 4.5% and diesel down by 8.0% over the same period last year. Benefited from product mix optimisation and the refined oil product pricing mechanism improvement, Refining Segment had an operating profit of RMB 13.44 billion, a reversal from the loss-making situation in the same period last year.

Marketing and Distribution:

In response to the changes in supply and demand of refined oil products, the Company optimised resource allocation and adjusted its marketing strategies and promoted the sales of high-octane gasoline and high-value-added products. In the transformation from a fuel supplier to a comprehensive service provider, the Company optimised marketing network and reinforced mutual promotion between fuel and non-fuel businesses. As a result, total retail volume and throughput per station sustained growth despite of intense market competition. In the first quarter, total sales volume of refined oil products was 47.21 million tonnes, up by 1.6% over the same period last year. Total domestic sales volume of refined oil products was 43.29 million tonnes, up by 3.0%, of which retail volume reached 29.66 million tonnes, up by 2.6% over the same period last year. Transaction of non-fuel business reached RMB 8.91 billion, up by 41.4% compared with the same period last year. The operating profit of Marketing and Distribution Segment was RMB 7.69 billion, up by 45.6% compared with the same period last year.

Chemicals:

The Company fine-tuned its feedstock mix to lower costs and enhanced the operations of its production facilities by adjusting utilisation rates based on marginal profitability, while keeping sustained safe and stable operations. The Company strengthened the links among research and development, production, marketing and sales of new products, and increased production of high-value-added products tailored to market demands. In the first quarter, ethylene production reached 2.82 million tonnes, up by 2.0% and chemical sales volume was 15.62 million tonnes, up by 6.7% over the same period last year. Benefited from feedstock mix and product slate adjustment, decreased feedstock costs and upgraded competitiveness of naphtha-based chemicals, the operating profit of Chemicals Segment was RMB 4.58 billion, up by 49.3% compared with the same period last year.

Capital expenditure:

The Company's capital expenditures were RMB 5.53 billion in the first quarter. Capital expenditures for exploration and production segment were RMB 1.34 billion, mainly for development in Fuling shale gas field, construction of LNG terminals in Guangxi and Tianjin, and construction of long-distance gas pipelines such as the Jinan-Qingdao gas pipeline (phase II), as well as development in overseas projects. Capital expenditures for refining segment were RMB 1.40 billion, mainly for gasoline and diesel quality upgrading projects and refinery revamping. Capital expenditures for marketing and distribution segment were RMB 1.23 billion, mainly for revamping service stations and building refined oil product pipelines, oil depots and storage facilities, as well as for hazard rectification. Capital expenditures for chemicals segment were RMB 1.53 billion, mainly for coal chemical projects, comprehensive utilisation of resources project and auxiliary facilities construction project.

Summary of Principal Operating Results for the First Quarter

Appendix

Principal financial data and indicators

Principal financial data and indicators prepared in accordance with China Accounting Standards for Business Enterprises (ASBE) 

Principal financial data and indicators prepared in accordance with International Financial Reporting standards (IFRS)

About Sinopec Corp.

Sinopec Corp. is one of the largest integrated energy and chemical companies in China. Its principal operations include the exploration and production, pipeline transportation and sale of petroleum and natural gas; the sale, storage and ransportation of petroleum products, petrochemical products, coal chemical products, synthetic fibre, fertiliser and other chemical products; the import and export, including an import and export agency business, of petroleum, natural gas, petroleum products, petrochemical and chemical products, and other commodities and technologies; and research, development and application of technologies and information.

Sinopec sets 'fueling beautiful life' as its corporate mission, puts 'people, responsibility, integrity, precision, innovation and win-win' as its corporate core values, pursues strategies of value-orientation, innovation-driven development, integrated resource allocation, open cooperation, and green and low-carbon growth, and strives to achieve its corporate vision of building a world leading energy and chemical company.

Disclaimer

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.