Sinopec bounces back with Q1 profit

10:27, April 30, 2010      

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Sinopec, Asia's biggest oil refiner, reported a 40 percent rise in first-quarter net profit Wednesday evening after last year's decline caused by the economic crisis.

Sinopec's net profit totaled 15.79 billion yuan ($230 million) in the first quarter, compared with 11.28 billion yuan ($1.65 billion) a year earlier as a result of high crude oil prices and growing domestic demand. Crude oil processing volume reached 49.5 million tons from January to March, an increase of 20.42 percent. Oil output was 29.49 tons, an increase of 14.64 percent, according to a statement the company filed with the Shanghai Stock Exchange Thursday.

"In the first quarter of 2010, the Chinese economy rebounded and under the government's drive to boost domestic consumption for natural gas, oil and chemical products (consumption) increased steadily," Sinopec said in the statement.

Sinopec's refining margins have been under intense pressure even as the company posted the quarterly earnings hike. Profit margins were squeezed by soaring crude oil costs. Sinopec, Asia's largest oil refiner, imports over 70 percent of the gasoline it sells each year and is actively seeking overseas investments in oil and gas resources.

Earlier this month, Sinopec Group Chairman Su Shulin announced the company would sign a package of agreements including crude oil procurements with Brazilian Petroleo Brasileiro SA (PBR).

It recently made a $4.65 billion deal for ConocoPhillips's stake in a Canadian oil sands project.

Sinopec's net profit was much lower than its rival PetroChina which reported a 71 percent rise in profit Tuesday with 32.49 billion yuan ($4.75 billion) of net profit in the first quarter this year.

Sinopec plans to issue 20 billion yuan ($2.9 billion) worth of corporate bonds in May to pay bank loans and increase liquidity, which would be China's biggest bond issuance.

China has raised retail gasoline and diesel prices twice this year, first in February and then again in mid-April, by 4-4.5 percent, raising concerns about worsening inflation in one of the world's fastest-growing economies.

Wang Xinhua, Sinopec's chief financial officer, said Thursday, "We'll lobby the government to make adjustments to the fuel prices if oil continues to rise."

A- shares of Sinopec closed down 0.7 percent Thursday on the Shanghai Stock Exchange.

Source: Global Times


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