Sinopec Profits Down for International Oil Prices Slide

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Last updated at: (Beijing Time) Friday, December 28, 2001

Sinopec Profits Down for International Oil Prices Slide

China Petrochemical Corp (Sinopec Group), the nation's second largest oil company, said its profits were down one-third as a result of the slide of oil prices on the international market and the cost of laying off over 200,000 employees.

Sinopec Group's President Li Yizhong on Thursday said the company posted a profit of 12.8 billion yuan (US$1.5 billion), down 32 per cent from last year's record high of 20 billion yuan (US$2.4 billion).

The company's turnover reached 360 billion yuan (US$43.5 billion) as compared to last year's 342 billion yuan (US$41.4 billion).

Li said the slide in profits was partly caused by the drop in the international oil price from US$27 a barrel last year to US$19 a barrel.

The price of petrol also dropped US$9 to US$23 a barrel with the world economic slowdown.

"The fall of oil prices has reduced profits from oil production and also pushed down refining revenues," said Li, whose company is also Asia's largest oil refiner.

The company produced 37.9 million tons of oil and sold 67.8 million tons of refined oil such as petrol and diesel this year, a 1 per cent increase over last year's sales.

Li said yesterday at the company's annual conference, that the speed-up of the lay-off programme also brought down the company's profits this year.

"But considering the huge cost of lay-offs, and the adverse operation environment, the company has done a great job this year," said Li.

Sinopec Group paid 7.4 billion yuan (US$894.8 million) to streamline its workforce by 213,700, almost 20 per cent of the 1.17 million employees it had last year.

"By laying off these people, we have saved wage costs of 1.9 billion yuan (US$229.7 million) this year," said Li.

"The faster we trim our workforce, the early we will benefit," said Li.

"The cut-down in employees this year could save us 4.7 billion yuan (US$568.3 million) in wages every year, and we could make up for the cost in four years," Li said.

Earlier, Sinopec Group said it plans to pare down its employees by 280,000 by 2005.

Li said it plans to lay off a further 55,000 people next year.

Li said it has spared no efforts to reinforce its control on the retail market for refined oil.

The group owns 24,200 petrol stations now, 4,200 more than it had at the end of last year.

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