By Chen Aizhu and Sam Li
(Reuters) -China’s Sinopec reported on Wednesday a 32% year-on-year decline in net income for the first three quarters due to lower oil prices and weaker fuel sales.
The world’s largest refiner by capacity, Sinopec’s third-quarter net profit was 8.5 billion yuan ($1.19 billion), largely flat from a year earlier, based on Chinese accounting standards. Net income for the first nine months was 29.98 billion yuan ($4.21 billion), Sinopec said in a stock filing.
Between January and September, Sinopec processed 186.4 million metric tons of crude oil, or about 4.98 million barrels per day (bpd), down 2.2% from a year earlier.
Sales of refined fuels fell 5.7% year-on-year during the period to 171.4 million tons. Of that, domestic sales made up 133.1 million tons, down 3.6%.
As oil prices weakened along with fuel sales, “the company optimized plant utilization and maximized output of the profitable products,” Sinopec said.
As a result, its refining department raked in 7 billion yuan profit before tax and interests for the 9-month period.
Sinopec produced 211.2 million barrels of crude oil during the first three quarters, down 0.1% on the year, while natural gas output rose 4.9% to 1,099.3 billion cubic feet.
Capital expenditure for the first nine months reached 71.6 billion yuan, versus 86.35 billion a year earlier, with nearly 60% of the spending on exploration and development projects such as Jiyang shale oil in east China and Tahe oilfield in the northwest.
The chemicals segment reported a 8.2 billion yuan loss before tax and interests during the nine-month period, despite a robust 15.4% growth in ethylene output, owing to “continued new capacity release” and “persistently thin margins.”
Sinopec’s Hong Kong-listed shares have dropped 5.2% year-to-date, underperforming the Hang Seng index which has risen 31.3% during the period.
(metric ton = 7.3 barrels for crude oil conversion)
($1 = 7.1230 Chinese yuan renminbi)
(Reporting by Chen Aizhu and Sam LiEditing by Bernadette Baum)
