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Sinopec to Axe 100,000 over Five Years
Sinopec Corp plans to slash 100,000 jobs in the next five years, with 27,000 jobs to go in 2001. The cost-cutting drive aims to reduce staffing levels 20 per cent by 2005, a company spokesman said Thursday, December 28.
The State oil giant, China's second largest oil firm, employs some 510,000 people.
"The 100,000-job scale-back by 2005 was part of our commitment to investors when we had our road show for the stock offer (in October)," the official told reporters from Beijing.
"The target for next year is (the removal of) 27,000 jobs."
Sinopec floated US$3.464 billion worth of shares in October through a dual listing in New York and Hong Kong.
The official said Sinopec would close small and low-efficient oil refining and chemical units, where most of the lay-offs would be targeted.
The cuts would also be in the form of early retirement with lump-sum compensation.
"We are studying detailed plans to carry this out," said the official.
The staff cuts are expected to reduce costs by US$265 million in 2001 and by a total US$1.6 billion in the next three years.
In another development, China's largest oil producer, PetroChina Co is expected to take a charge of around 3 billion yuan (US$362 million) in 2000 as the cost of cutting 35,000 jobs, a source close to the company said Thursday.
The planned job cuts are part of a previously announced plan to reduce the company's workforce by about 50,000 or some 10 per cent, over the next five years.
The source said PetroChina's Chief Financial Officer Wang Guoliang recently briefed analysts about the plans for the charge, for the year ended December 31, and told them that the company also intended to accelerate its restructuring programme.
"This is a result of pressure from institutional investors who want to see the cost cutting move faster," said the source, who spoke on condition of anonymity.
Officials in PetroChina's Hong Kong office could not be reached for comment Thursday.
Dao Heng Securities analyst Ben Tam said in a research note that if the 3 billion yuan charge was taken, it would be about three times the restructuring charge disclosed in the company's prospectus for its initial public offering last April.
"While oil prices continue to trend down, we believe this counter is fully valued," he wrote.
Goldman Sachs, the sponsor of PetroChina's US$2.89 billion IPO, estimated in a research report that PetroChina will report a profit of 52.8 billion yuan (US$6.38 billion) for 2000 after provisions, more than double the 22.4 billion yuan (US$2.87 billion) the company earned last year.
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