Sinopec Announces 2014 Third Quarter Results

BEIJING, Oct. 30, 2014 /PRNewswire/ -- China Petroleum & Chemical Corporation ("Sinopec" or "the Company") (HKEX: 386; CH: 600028; NYSE: SNP) today announced its unaudited third quarterly results ended 30 September 2014.

Financial Highlights:

• In accordance with the International Financial Reporting Standards (IFRS), the Company's turnover and other operating revenues was RMB 2,115.6 billion for the first three quarters of 2014, down 1.13% over the same period of last year. Turnover and other operating revenues for the third quarter was RMB 759.5 billion, up 4.80% over the same period last year. Net profit attributable to owners of the Company was RMB51.8 billion, down 0.96% year-on-year. Net profit attributable to owners of the Company for the third quarter was RMB 19.3 billion, down 12.55% over the same period last year. Basic earnings per share for the first three quarters were RMB 0.444 while third quarter basic earnings per share were RMB 0.165.
• In accordance with the China Accounting Standards for Business Enterprises ("ASBE"), net profit attributable for equity shareholders of the Company for the first nine months was RMB 51.2 billion and third quarter net profit was RMB 19.7 billion, down 0.84% and 11.02% respectively over the same period last year. Basic earnings per share for the first three quarters were RMB 0.438 while third quarter basic earnings per share were RMB 0.169.
• Net cash flow from operating activities during the reporting period increased 35.97% year-on-year to RMB 108.2 billion.

Results Review:

In the first three quarters of 2014, China's economic growth has slowed down with GDP up 7.4% over the same period last year. Domestic apparent consumption of oil products grew by 2.8%, with strong increases in gasoline and kerosene consumption and a decline in diesel consumption. Domestic consumption of ethylene equivalent rose by 5.9%. International crude oil price slumped sharply in the third quarter after a slight rebound in the first half. Domestic gasoline and diesel prices were timely adjusted following the international crude price, among which the third quarter saw 5 consecutive price cuts. The Chinese government further adjusted the natural gas price, raising the city gate price cap for non-residential existing gas. The competitions from the imported chemical products and the increase of newly added domestic production capacity posed great challenges to domestic chemical producers, with chemical profit margins decreasing but rebounding slightly in the third quarter.

Exploration and Production: Steady Growth of Oil and Gas Production

In exploration, we focused on oil and gas commercial discoveries, optimised exploration areas and made further discoveries in Tarim basin, Sichuan basin and Erdos basin. In development, we strengthened our efforts in progressive exploration and reservoir evaluation, implementing five oil and gas development projects in Zhungar, Tahe and east Shengli. In natural gas development, projects in Yuanba, Daniudi and middle-shallow layer of west Sichuan, as well as Fuling shale gas project proceeded smoothly. During the first three quarters, the oil and gas production of the Company reached 357.41 million barrels of oil equivalent, up by 8.05%, out of which crude oil output increased by 7.66% and natural gas increased by 9.14%, compared with the same period last year. Influenced by factors such as the falling of price and rising cost, the operating profit of Exploration and Production Segment recorded RMB 41.748 billion, down by 10.69% compared to the same period last year.

Refining: Significant Improvement in Refining Margin

We actively adjusted the product mix in response to changes in domestic oil products demand, and produced more gasoline, jet fuel and high value-added products. We actively promoted the quality upgrade of refined oil products, significantly increasing the output of GB V gasoline and GB IV standard diesel. We optimised resource allocation and reduced processing costs of crude oil. We took advantage of specialized marketing and enhanced the sales of LPG, petroleum wax and asphalt. In the first three quarters of 2014, refinery throughput and refined oil products increased by 0.94% and 3.67% respectively over the same period last year, with gasoline up by 12.08%, jet fuel up by 19.70% and diesel down by 4.75%. The operating profit of Refining Segment recorded RMB 11.102 billion, up 66.80% compared to the same period last year.

Marketing and Distribution: Restructuring Progress on Track

We accelerated the restructuring and reform of our marketing business and had completed the auditing, assets evaluation and signing of the capital injection agreements. In light of sufficient market supply and strong competition, we focused on resource allocation, increased the sales of premium products significantly and adjusted our marketing strategies to expand the scale of the retail business. Focusing on customer base, we implemented a differentiated marketing strategy and provided tailor-made services. For the cross promotion of fuel and non-fuel business, we promoted market-oriented and specialized development of non-fuel business, and enhanced the value-creation capability of the sales network.  In the first three quarters, total sales volume of refined oil products reached 138 million tonnes, up by 2.61% over the same period last year. Total domestic sales volume of refined oil products reached 126 million tonnes, up by 1.91%, of which retail volume reached 86.56 million tonnes, representing an increase of 2.05%. Sales of non-fuel business reached RMB 11.45 billion, an increase of 15.00% compared with the same period last year. The operating profit of the Marketing and Distribution Segment was RMB 26.439 billion, representing a decrease of 2.20% over the same period last year.

Chemicals: Turned Profitable in the Third Quarter

Faced with new domestic chemical capacities coming on stream, increase of the imported chemical products and stronger competition, we actively optimised our feedstock mix, and processed more low-cost light feedstock to reduce cost. We promoted product mix and strengthened research, development, production and marketing of new products; we optimised the facilities utilization rate by shutting down non-profitable units. Meanwhile, we optimised our marketing strategies and improved our services. In the first three quarters, ethylene production reached 7.858 million tonnes, up by 6.22% over the same period last year, and chemical sales volume was 47.335 million tonnes, up by 2.17%. The total operating losses of the Chemicals Segment was RMB 3.516 billion, of which the third quarter made a turn-around and recorded RMB 0.452 billion operating profit.

Capital Expenditures

The Company's capital expenditures were RMB 69.387 billion in the first three quarters of 2014.

Capital expenditure for exploration and production segment was RMB 37.226 billion, mainly for the construction of oil and gas production capacities in Shengli oilfield, Tahe oilfield, Yuanba marine faces gas field, Daniudi gas field in northern China, etc.; development of Fuling shale gas in Chongqing; LNG projects and natural gas pipeline construction in Shandong and Guangxi provinces, etc..

Capital expenditure for refining segment was RMB 11.016 billion, mainly for refinery revamping and quality upgrading projects in Shijiazhuang, Yangzi, Tahe and Jiujiang.

Capital expenditure for the chemicals segment was RMB 9.415 billion, mainly for product mix adjustment projects including Qilu acrylonitrile, Maoming polypropylene, and the construction of other basic chemical projects, the acquisition of equity interest in Ningdong coal chemical project and investment in ZhongAn coal chemical project.

Capital expenditure for the marketing and distribution segment was RMB 9.671 billion, mainly for revamping of service (gas) stations and for construction of oil product pipeline and depots, as well as the safety risks rectification and oil vapour recovery.

Capital expenditure for corporate and others was RMB 2.059 billion, mainly for R&D facilities and IT projects. 

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:

Sinopec is one of the largest integrated energy and chemical companies with upstream, midstream and downstream operations in China. Its principal operations include: the exploration and production, pipeline transportation and sales of petroleum and natural gas; the sales, storage and transportation of petroleum products, petrochemical products, synthetic fibre, fertilizer and other chemical products; import & export, as well as import and export agency business of oil, natural gas, petroleum products, petrochemical and chemical products, and other commodities and technologies; and research, development and application of technologies and information.

Adhering to its corporate mission of "to provide energy for a better living", Sinopec implements strategies of resources, markets, integration, internationalization, differentiation and green low-carbon development with a view to realize its vision of building a people-oriented, 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.

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