Sinopec's quarterly net income falls 28% on slower fuel sales

Sinopec Corp. reported on Monday that its first-quarter profits fell 27.6% from a year ago, due to lower oil prices, and to the fact that its refinery operations were struggling with falling fuel sales and thin profit margins.

Sinopec, formerly known as China Petroleum & Chemical Corp., reported a net income of 13.26 billion yuan (1.82 billion dollars) between January-March, based on Chinese accounting principles.

China, the second largest consumer of gasoline in the world, is most vulnerable to competition from electric vehicles. Diesel demand is also constrained by China’s still-struggling economy.

Sinopec, which is the largest refinery group in the world by capacity, reported that China's overall refined fuel demand fell 4% on an annual basis during the first quarter.

The crude oil throughput of the country fell by 1.8% to 62.13 millions metric tons or 5,04 million barrels a day.

The total refined fuel sales fell 7.1% to 55.59 millions tons. This includes domestic sales, which dropped 5.3% to 43.2 million tonnes.

Sinopec’s production of ethylene, an essential building block in the production of petrochemicals rose 17.7% to 3,86 million tons during the period, reversing the two consecutive annual drops that occurred for the three-month time period.

Chemicals, on the other hand, suffered a loss of 1,32 billion yuan in a quarter due to a "severe environment with low margins".

The production of crude oil fell by 1.2% over the past year, to 69.53 millions barrels or about 773,000 barrels per day, while natural gas increased 5.1%, to 368.4 BCF.

The capital expenditure was 18.25 billion Yuan, down from 20.50 billion Yuan one year earlier. The upstream department received 70% of the total for oil projects such as Jiyang, in east China, and Tahe, in the north, as well the Fuling shale-gas project in southwest China.

Sinopec shares listed in Hong Kong closed Monday with a 0.25% gain, after losing 11.5% this year.

(source: Reuters)