China’s Sinopec posts 30% dive in net profit

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SHANGHAI: Chinese energy firm Sinopec said net profit plunged 30 percent last year as it was hit by the collapse in oil prices, which has sent shockwaves through global markets and battered the country’s other industry giants.

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Sinopec’s net profit came in at 32.4 billion yuan ($5.0 billion) last year, compared with 46.5 billion yuan in 2014, according to a statement filed to the Shanghai exchange late Tuesday.

However, it beat the 29.97 billion yuan profit mean estimate in a survey of analysts by Bloomberg News.

“In 2015, the global economic recovery remained weak and (the) Chinese economy maintained steady growth with (gross domestic product) up by 6.9 percent,” the company statement said.

“International oil prices were under downward pressure while fluctuating to new lows.”

Energy firms around the world have taken a heavy hit in recent months as the price of crude plunges — approaching 13-year lows in February — owing to a global supply glut and overproduction.

At the same time China’s economic growth has slowed, coming in at its weakest pace in a quarter of a century last year.

Sinopec’s revenue dropped 28.9 percent year-on-year to 1.98 billion yuan, according to the statement.

Two other Chinese oil majors, PetroChina and offshore operator CNOOC, both registered net profit declines of more than 66 percent last year. Analysts said Sinopec’s refining business helped cushion it from the impact of lower crude oil prices.

PetroChina, the country’s biggest energy firm, posted its lowest profit since 1999 with earnings tumbling 66.7 percent year-on-year to 35.65 billion yuan.

“If you compare earnings with PetroChina and CNOOC, Sinopec has done the best and will remain to be the most defensive oil stock,” Gordon Kwan, head of Asia oil and gas research at Nomura Holdings in Hong Kong, told Bloomberg.

Sinopec’s crude oil output dropped 3.1 percent to 349.47 million barrels in 2015.

The company’s Shanghai-listed shares were up 4.63 percent on Tuesday afternoon.

AFP

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