China Petroleum & Chemical Corp (中國石化), Asia’s biggest refiner, said first-half profit rose more than four-fold, beating estimates, after the government eased curbs on fuel prices and the nation’s economic recovery spurred demand.
First-half net income increased to 33.2 billion yuan (US$4.86 billion), or 0.381 yuan a share, from a restated 7.7 billion yuan, or 0.057 yuan a share, a year earlier, while first-half revenue fell 27 percent from a year earlier to 534 billion yuan, the Beijing-based company also known as Sinopec said in a statement to the Hong Kong stock exchange yesterday.
Sinopec’s profit gain contrasts with earnings declines at Royal Dutch Shell PLC and Exxon Mobil Corp, the world’s biggest oil companies, after the global recession cut consumption in the US and Europe. China has adjusted fuel tariffs five times this year, compared with twice last year, to reflect changes in crude prices and assure refiners a profit. The policy shift helped Sinopec end at least four years of refining losses.
“Sinopec has shown a huge improvement because of the changes to the pricing mechanism,” said Lorraine Tan (陳麗子), director of equity research at Standard & Poor’s in Singapore. “The government still sets oil-product prices, but at least Sinopec is now guaranteed a profit margin.”
Sinopec expects its earnings for the first nine months to rise more than 50 percent from a year earlier, the statement said.