China Petroleum & Chemical Corp (referred to as Sinopec) announced a 16.8 per cent drop in its net profit for 2024, attributing this to reduced crude oil prices and the faster growth of the new energy vehicle (NEV) sector. Sinopec's shares listed in Hong Kong decreased by 3.3 per cent at approximately 10:40 a.m. local time on Monday, having previously declined by as much as 4.5 per cent earlier, marking their most significant one-day decline in five months.
The Shanghai-listed stock (600028.SS) fell 1.4 per cent. The largest oil refiner globally by capacity reported a net profit of 50.3 billion yuan ($6.94 billion), according to a filing with the Shanghai Stock Exchange on Sunday, adhering to Chinese accounting standards, per Reuters.
Sinopec profit drops amid NEV growth.
"Sinopec stated in the filing that in 2024, global crude oil prices declined, prompting the domestic transportation sector to quickly adopt new energy sources, leading to a marked reduction in gross profit margins." "The company exerted every effort to grow the market and sales ... (and) persists in enhancing cost and expense management while implementing various strategies to adapt to market fluctuations." The decrease in net income corresponds with a drop of 9.9 per cent in 2023, also due to declining oil prices. Gasoline sales by the state oil and gas major decreased by 0.7 per cent, while diesel sales dropped by 4.8 per cent. Sales of aviation fuel increased by 7.3 per cent. The numbers encompassed both local sales and overseas shipments.
Refinery throughput decreased by 2.14 per cent to 252 million metric tons, corresponding to 5.04 million barrels each day. The firm predicted an increase to 255 million tons this year. In a research note released early Monday, analysts at Citigroup indicated that reduced utilisation among small, independent refiners might "slightly benefit Sinopec's refining and marketing divisions," but increased adoption of electric vehicles and LNG trucks could still replace gasoline and diesel consumption. Sinopec anticipates crude oil output in 2025 will reach 280.15 million barrels, equivalent to 767,530 bpd, and natural gas production of 1,450.3 billion cubic feet.
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The firm announced it allocated provisions for asset impairment totalling 7.2 billion yuan ($993.3 million) in 2024 due to "market price variations of certain products, closures, or losses of specific production facilities." Confronted with over-capacity and intensified domestic rivalry, Sinopec's sales of plastics, synthetic rubber, and fertiliser declined by 6.9 per cent, 3.3 per cent, and 47.3 per cent, respectively. Sinopec reported that chemical fibre was the sole primary product to see an increase, at 10 per cent. Sinopec announced its intention to spend 164.3 billion yuan in capital this year for essential investments like exploration and development.
($1 = 7.2486 yuans)
(metric ton = 7.3 barrels for converting crude oil)
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