Sinopec profit jumps 44 per cent on cheaper crude and pipeline sales
Oil refiner expects 150 per cent surge in income for first quarter of 2017 after posting first profit growth in three years
China Petroleum & Chemical Corp (Sinopec) reported its first profit gain in three years as the world’s largest oil refiner got a boost from cheaper crude and took a one-time gain from pipeline sales.
Net income in 2016 rose 44 per cent to 46.7 billion yuan (US$6.8 billion), the company said in a statement to the Shanghai stock exchange on Sunday. That compares with a mean of 39.9 billion yuan from 19 estimates compiled by Bloomberg. Revenue fell about 4 per cent to 1.93 trillion yuan.
Sinopec may continue to benefit from China’s strong fuel demand growth, especially [petrol]
Global oil refiners have fared better than producers during the energy downturn as cheaper crude boosted profit margins and stimulated fuel demand. Along with slashing spending, that has helped the Beijing-based company outperform its state-owned rivals despite falling oil prices and declining production.
In a separate statement, the company projected income during the first quarter of this year jumped 150 per cent, citing higher oil prices, stable demand and improved profitability.
“Lower crude prices really helped Sinopec’s margins last year,” said Tian Miao, an analyst at North Square Blue Oak. “Sinopec may continue to benefit from China’s strong fuel demand growth, especially [petrol]. The risk for Sinopec going forward is that crude prices rise too high and too fast as higher upstream margins wouldn’t be enough to cover refining losses.”
Gross refining margins in 2016 were 471.90 yuan a tonne, about 48 per cent higher than the previous year, the company said. It also booked a 20.56 billion yuan gain from the sale in December of a 50 per cent stake in a pipeline unit, Sinopec Sichuan-to-East China Gas Pipeline.
