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Sinopec's Operating Income for 2020 Q1 was RMB 555.502 Billion

Integrated Business into Full Play; Coordinated Efforts were Made to Contain the Spread of COVID-19, Resume Work and Production.

BEIJING, April 30, 2020 /PRNewswire/ -- China Petroleum & Chemical Corporation ("Sinopec Corp." or the "Company") (HKEX: 00386; SSE: 600028; NYSE: SNP) today announced its unaudited first quarterly results for the three months ended 31 March 2020.

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Financial Highlights

  • In accordance with the CASs, the Company's operating income for the first quarter was RMB 555.502 billion; the net profit attributable to equity shareholders of the Company was RMB -19.782 billion; the basic earnings per share were RMB -0.163.
  • In accordance with the IFRS, the Company's operating profit for the first quarter was RMB -26.305 billion; the net profit attributable to shareholders of the Company was RMB -19.145 billion; the basic earnings per share were RMB -0.158.
  • In accordance with the IFRS, the Company had cash and cash equivalents (including time deposits) of RMB 138.773 billion as at 31 March 2020.

Operating Review

In the first quarter of 2020, as the COVID-19 outbreak spread worldwide, the world economy faced mounting downside risk packing with notably increasing instability and uncertainty. China's GDP decreased by 6.8% year on year. Due to plunging market demand for petroleum and petrochemical products coupled with slump of crude oil price, oil and gas industry was severely impacted.

Facing the complicated and severe situation, the Company adhered to the principles of "concentrating material tasks, system optimisation, controlling risk and seizing opportunities out of crisis", coordinated epidemic prevention and control with work resumption, brought our advantages of integrated business into full play, optimised production plan, refined operation plan, adjusted products slate, optimised inventory, expanded market, and tapped potentials and reduced cost to minimize the negative impact and maintained safe and steady operations. In particular, to combat the COVID-19, we maintained a stable supply of oil and gas, made great efforts to increase production of medical-use materials, coordinated online and offline non-fuel business to facilitate our customers with wider variety of products and services, and advanced resumption of work and production with industry chain partners.

In accordance with China Accounting Standards for Business Enterprises, net profit attributable to equity shareholders of the Company was RMB -19.782 billion. In accordance with IFRS, net profit attributable to equity shareholders of the Company was RMB -19.145 billion.

Exploration and Production: Under low crude oil price environment, we pressed ahead with high-efficiency exploration and paid more efforts on profit-oriented development, reduced cost and expenditure on all fronts and accelerated the formation of an integrated value chain of natural gas business including production, supply, storage and marketing. In exploration, we focused on organisation and operation of major projects and new discovery breakthrough. In crude oil development, we pushed to build profitable production capacity, and deepened structure adjustment in mature oil fields. In natural gas development, we expanded the market and promoted a coordinated growth along the value chain. In the first quarter, oil and gas production of the Company was 112.28 million barrels of oil equivalent, among which the production of crude oil was broadly flat compared with the same period of last year. Exploration and Production Segment realised an operating profit of RMB 1.518 billion.

Exploration and Production

Unit

Three-month period ended
31 March

Changes

2020

2019

(%)

Oil and gas production

million boe

112.28

113.46

(1.0)

Crude oil production

million barrels

70.65

70.81

(0.2)

     China

million barrels

62.11

61.55

0.9

     Overseas

million barrels

8.54

9.26

(7.8)

Natural gas production 

billion cubic feet

249.68

255.79

(2.4)

Realised crude oil price

USD/barrel

49.15

57.66

(14.8)

Realised natural gas price

USD/thousand
cubic feet

6.43

7.07

(9.2)






Conversion: For domestic production of crude oil, 1 tonne = 7.10 barrels. For overseas production of crude oil,
1 tonne = 7.21 barrels. For production of natural gas, 1 cubic meter = 35.31 cubic feet.


Refining: Facing severe situation of plunged market demand, high-level inventory and slump of crude oil price, we persistently coordinated the integration of production and marketing, optimised allocation of resources and product slate based on market demand and continuously implemented low sulfur fuel oil projects. We coordinated domestic and overseas markets and increased the export of refined oil products, maintaining a steady operation of refining facility. In the first quarter, refinery throughput was 53.74 million tonnes, decreased by 13% year on year. The refining segment's operating loss was RMB 25.794 billion.



Three-month period ended
31 March

Changes



(%)

Refining

Unit

2020

2019


Refinery throughput

million tonnes

53.74

61.78

(13.0)

Gasoline, diesel and kerosene
production 

million tonnes

33.00

39.44

(16.3)

     Gasoline 

million tonnes

13.02

15.87

(18.0)

     Diesel 

million tonnes

14.19

16.03

(11.5)

     Kerosene

million tonnes

5.79

7.54

(23.2)

Light chemical feedstock

million tonnes

9.84

10.07

(2.2)

Light product yield

%

75.31

76.14

(0.83)

percentage
points

Refining yield

%

94.64

94.76

(0.12)

percentage
points






Note Including 100% production of domestic joint ventures.

Marketing and Distribution: To address the dramatic decline of market demand, we enhanced market analysis, pressed ahead measures for market expansion, promoted targeted marketing strategy and tapped the potentials of distribution network. We innovated the non-fuel business model by coordinating online and offline business with wider variety of products and services to facilitate our consumers. In the first quarter, total sales volume of refined oil products was 53.68 million tonnes and marketing and distribution segment's operating loss was RMB 1.536 billion.

Marketing and Distribution

Unit 

Three-month period ended
31 March

Changes 

2029

2019

(%)

Total sales volume of refined oil
products

million tonnes 

48.61

62.37

(22.1)

Total domestic sales of refined oil
products

million tonnes

32.48

45.61

(28.8)

     Retail 

million tonnes

21.83

30.20

(27.7)

     Direct sales & Distribution

million tonnes

10.65

15.41

(30.9)

Throughput per station

tonnes 

2,844

3,939

(27.8)






Note: The total sales volume of refined oil products includes the amount of trading volume

Chemicals: Under the circumstances of dramatic demand decline and price tumble of chemical products, we actively optimised resources allocation, reduced feedstock cost, adjusted operation plan and enhanced the dynamic optimisation of facilities and product chain, and improved the utilisation and production scheduling based on market demand. Giving full play to our industry advantages, we extended business value chain by increasing production of medical-use materials to ensure market supply. We put more efforts on market expansion to create space for production optimisation and adjustment as well as facilities stable operation. In the first quarter, the ethylene production was 3.026 million tonnes, being flat compared with the same period of last year, synthetic resin production increased by 2.8% year on year. The total chemical sales volume was 17.95 million tonnes. The Chemical segment's operating loss was RMB 1.568 billion.

Chemicals

Unit

Three-month 

Changes 

period ended 31 March

(%)

2020

2019


Ethylene

thousand tonnes

3,026

3,049

(0.8)

Synthetic resin

thousand tonnes 

4,293

4,178

2.8

Synthetic rubber

thousand tonnes 

256

271

(5.5)

Monomers and polymers for
synthetic fibre

thousand tonnes 

2,333

2,575

(9.4)

Synthetic fibre

thousand tonnes 

266

322

(17.4)






Note: Including 100% production of domestic joint ventures.


Capital expenditure: In the first quarter, total capital expenditures of the Company was RMB 13.2 billion. Capital expenditure for the exploration and production segment was RMB 6.1 billion, mainly for Shengli and Northwest crude oil development projects, Fuling and Weirong shale gas projects. Capital expenditure for the refining segment was RMB 2.4 billion, mainly for Zhongke Refining and Petrochemical project, Zhenhai, Tianjin, Maoming and Beihai refining upgrading projects, low sulfur fuel oil projects and high-end carbon materials projects. Capital expenditure for the marketing and distribution segment was RMB 2.6 billion, mainly for construction of service stations, refined oil products depots and non-fuel businesses. Capital expenditure for the chemicals segment was RMB 2.1 billion, mainly for Zhongke, Zhenhai, Gulei, Zhonghan, Hainan projects.

Business Prospects

China's epidemic prevention and control trend has been further consolidated, the country's economic and social activities have gradually returned to normal, the production and living order has been restored at a faster pace, and the pent-up demand for petroleum and petrochemical products is being released. Under this opportunity, we have initiated a campaign that will last for 100 days to address the tough challenges and to improve performance. With management and staffs joint efforts, we are to reinforce measures on market expansion, operations optimisation, cost reduction, tapping potentials, and maintaining safe and steady operations.

We will adjust dynamically the production and operation arrangement and the investment plan, focusing on achieving a high-quality and more profitable operation. While ensuring prevention and control of the pandemic and maintaining safe and stable operation, we will give priority to the following tasks:

More vigorous efforts on market expansion. We will keep pace with the market recovery and the industry utilisation rate to seize the market opportunities, provide targeted services to reinforce the market share. Through innovation of business model and analysis of consumption demand changes, we will exploit potential demand to expand market share. By giving full play to the advantages of the industry chain, we will strengthen cooperation with partner and realise coordinative development.

More vigorous efforts on optimisaiton and adjustment. We will bring our advantages of integrated business into full play, refine the allocation of resources, and coordinate all the activities including procurement, transportation, production, storage and marketing. In the E&P segment, we will strengthen the overall coordination of "investment, reserves, output, cost, and profit". In the mid- and down-stream, we will coordinate the operation, feedstock slate, product mix and regional resources, accelerate advantages cultivation and production capacity building, and reinforce the effort in the integration of the production with the marketing.

More vigorous efforts on tapping potentials and cost reduction. We will conduct fine management and strengthen cost control involving all employees, covering all resources and conducting in all processes. We will improve the capital efficiency, expand financing channels and reduce financing cost.

Appendix: Principal financial data and indicators

Principal financial data and indicators prepared in accordance with CASs


Units: RMB million

Items

As of 31
March

2020

As of 31
December

2019

Changes from the end
of the preceding year
to the end of the
reporting period (%)

Total assets

1,807,539

1,755,071

3.0

Total equity attributable to equity
shareholders of the Company

712,350

739,169

(3.6)

Units: RMB million

Items

Three months ended 31 March

Changes over the
same period of the
preceding year (%)

2020

2019

Net cash flow from operating activities

(68,125)

(14,609)

-


Operating income

555,502

717,579

(22.6)

Net profit attributable to equity
shareholders of the Company

(19,782)

14,763

-

Net profit attributable to equity
shareholders of the Company
excluding extraordinary gains and
losses

(20,444)

14,370

-

Weighted average return on net
assets (%)

(2.73)

2.03

(4.76) percentage
points

Basic earnings per share (RMB)

(0.163)

0.122

-

Diluted earnings per share (RMB)

(0.163)

0.122

-

 


Extraordinary gain/loss items

During the reporting period

(gains)/loss (RMB million)

Net gain on disposal of non-current assets

(60)

Donations

73

Government grants

(1,164)

Gains on holding and disposal of various investments

(26)

Other extraordinary income and expenses, net

255

Subtotal

(922)

Tax effect

234

Total

(688)

Attributable to:


Equity shareholders of the Company

(662)

Minority interests

(26)

 

Principal financial data and indicators prepared in accordance with IFRS


Units: RMB million

Items

As of 31 March

 2020

As of 31 December

 2019

Changes from the end
of the preceding year
to the end of the
reporting period (%)

Total assets

1,807,539

1,755,071

3.0

Total equity attributable to
shareholders of the Company

711,343

738,150

(3.6)


Units: RMB million

Items

Three months ended 31 March

Changes over the
same period of the
preceding year (%)

2020

2019

Net cash generated from operating
activities

(68,125)

(14,609)

-


Operating profit

(26,305)

24,841

-

Net profit attributable to shareholders
of the Company

(19,145)

15,468

-

Basic earnings per share (RMB)

(0.158)

0.128

-

Diluted earnings per share (RMB)

(0.158)

0.128

-

Return on net assets (%)

(2.69)

2.09

(4.78) percentage points

About Sinopec Corp.

Sinopec Corp. is one of the largest integrated energy and chemical companies in China. Its principal operations include the exploration and production, pipeline transportation and sale of petroleum and natural gas; the sale, storage and transportation of petroleum products, petrochemical products, coal chemical products, synthetic fibre, fertiliser and other chemical products; the import and export, including an import and export agency business, of petroleum, natural gas, petroleum products, petrochemical and chemical products, and other commodities and technologies; and research, development and application of technologies and information.

Sinopec sets 'fueling beautiful life' as its corporate mission, puts 'people, responsibility, integrity, precision, innovation and win-win' as its corporate core values, pursues strategies of value-orientation, innovation-driven development, integrated resource allocation, open cooperation, and green and low-carbon growth, and strives to achieve its corporate vision of building a 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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SOURCE China Petroleum & Chemical Corporation