Sinopec 2023 profit falls 13% on oil prices

Sinopec’s annual profits declined 13% after oil prices fell and Chinese refiners posted a record year for processing and imports, Report informs via Bloomberg.

China’s largest fuel processor, officially known as China Petroleum & Chemical Corp., reported 58.3 billion yuan ($8 billion) net income for last year, it said in an exchange filing. That compared with 66.2 billion yuan in 2022.

Global oil prices were 17% lower in 2023 than the previous year, which reduced the value of Sinopec’s drilling output but also lowered its crude costs.

The results missed the average analyst estimate despite a rebound in its key refining margins, as upstream profits fell and its chemicals business continued to lose money. Chinese refiners ramped up fuel production last year to feed a populace eager to travel after Covid-19 restrictions were lifted. Still, the company had to grapple with a tepid economic recovery that created a glut of some chemicals like ethylene.

Sinopec set its 2024 capital expenditure budget at 173 billion yuan, slightly below last year’s 176.8 billion yuan spending bill, mainly due to a scale-back in the chemical sector.

It plans to maintain modest growth in both output and processing in 2024, with targeted oil and gas production is 1% higher than 2023 levels and refining throughput to increase 0.8%. Domestic refined oil product sales, which jumped 16% last year, are only expected to rise 1.6% this year.