Sinopec Achieved Good Performance for the First Three Quarters of 2022

Rhea-AI Summary

Sinopec Corp. reported a 22.6% increase in operating income to RMB 2.45 trillion for the nine months ending September 30, 2022. However, net profit decreased by 5.6% to RMB 57.284 billion, with basic earnings per share at RMB 0.473. Domestic crude oil production rose by 0.8% to 188 million barrels, and natural gas production increased by 4.1% to 913.81 billion cubic feet. The company faced challenges from high crude oil prices and a fluctuating market, leading to a 49.3% decline in cash flow from operating activities.

Positive

• Operating income increased by 22.6% to RMB 2.45 trillion.
• Domestic crude oil production rose by 0.8% to 188 million barrels.
• Natural gas production increased by 4.1% to 913.81 billion cubic feet.

Negative

• Net profit decreased by 5.6% to RMB 57.284 billion.
• 49.3% decline in net cash flow from operating activities.
• Refinery throughput fell by 5.6%, affecting the output of refined oil products.

HONG KONG, CHINA / ACCESSWIRE / October 28, 2022 / China Petroleum & Chemical Corporation ("Sinopec Corp." or the "Company") (HKEX:00386)(SSE:600028) today announced its unaudited results for the nine months ended 30 September 2022.

Financial Highlights

• In accordance with IFRS, the Company achieved operating income of RMB2.45 trillion in the first three quarters, up by 22.6% year-on-year; net profit attributable to shareholders of the Company was RMB57.284 billion, basic earnings per share were RMB0.473. The Company's financial position remained stable and operating cash flow improved quarter by quarter.
• The Company actively responded to market changes, deepened the optimization of the entire industry chain, enhanced production and marketing coordination, and achieved high-quality operating results. In the first three quarters, domestic crude oil production reached 188 million barrels, up by 0.8% year-on-year; natural gas production was 913.81 billion cubic feet, up by 4.1% year-on-year; refinery throughput reached 180 million tonnes; total domestic sales volume of refined oil products was 122 million tonnes; and ethylene production was 10.00 million tonnes, up by 2.6% year-on-year.
• The Company attached great importance to corporate value enhancement and the protection of shareholders' rights and interests by launching and implementing share buyback scheme both in A-share and H-share markets.

Operating Review

In the first three quarters of 2022, the world economic growth slowed down. As China effectively coordinated pandemic prevention and control with economic and social development, domestic economy stabilized and resumed growth momentum in the third quarter with the GDP grew by 3.9% year-on-year. International crude oil prices rose sharply and fluctuated in the first three quarters and then spiralled down in the third quarter. The average spot price of Platts Brent was USD102.5 per barrel, up by 50.8% year-on-year. Domestic demand for natural gas remained stable. According to the Company's statistics, domestic demand for refined oil products shrank in the first half of this year and then bounced back with a growth rate of 1.5% year-on-year in the third quarter. Meanwhile, demand for major chemical products was weak due to high crude oil price and the pandemic, leading to a contraction in profit margin. The ethylene equivalent consumption decreased by 1.0% year-on-year in the first three quarters.

In the face of severe and complex environment of production and operation, the Company took full advantages of its integrated industrial chain, actively responded to market changes, deepened the optimization of entire industrial chain, enhanced production and marketing coordination, and achieved high-quality operating results.

Exploration and Production: The Company seized the favourable opportunities from high oil prices to intensify efforts in exploration and development, consolidated the resource base, improved operational performance, and realised growth in production and profit. In terms of exploration, the Company stepped up venture exploration and trap preliminary exploration in new regions and areas, and achieved a number of oil and gas discoveries, including breakthroughs in the Shunbei oil and gas fields located in Tarim Basin, the shale oilfields in Bohai Bay Basin and Subei Basin, the ultra-deep natural gas exploration in Sichuan Basin. In terms of development, the Company accelerated the capacity expansion of major oilfields, such as those in Shunbei, Tahe and offshore blocks. It enhanced the efficiency of mature oil fields and fine-tuned their development. It also actively expanded the capacity of key natural gas blocks in Shunbei and Sichuan basins, and further optimized the entire natural gas business chain and improved its profitability. In the first three quarters of 2022, the Company's oil and gas production reached 363.18 million barrels of oil equivalent, up by 2.3% year-on-year. Crude oil production reached 210.82 million barrels, up by 1.0% year-on-year and natural gas production reached 913.8 billion cubic feet, up by 4.1% year-on-year. The exploration and production segment realised earnings before interest and tax (EBIT) of RMB 46.245 billion in the first three quarters.

Exploration and Production	Unit	Nine-month period ended 30 September		Changes
		2022	2021	(%)
Oil and gas production	million boe	363.18	355.01	2.3
Crude oil production	million barrels	210.82	208.65	1.0
China	million barrels	188.05	186.59	0.8
Overseas	million barrels	22.77	22.06	3.2
Natural gas production	billion cubic feet	913.81	877.85	4.1
Realised crude oil price	USD/barrel	94.24	60.94	54.6
Realised natural gas price	USD/thousand cubic feet	7.54	6.74	11.9

Conversion: For domestic production of crude oil, 1 tonne = 7.1 barrels. For overseas production of crude oil, 1 tonne = 7.05 barrels. For production of natural gas, 1 cubic meter = 35.31 cubic feet.

Refining: The Company actively dealt with the challenges brought by high crude oil price and the pandemic, insisted on the integration and optimization of production and marketing, leveraged the adaptability of its facilities to maintain their stable operation. It flexibly adjusted the utilization rate of facilities, the product slate and the pace of export in accordance with the market conditions and reduced the inventory level. It optimized the pace of crude oil procurement and resources allocation to reduce procurement costs. Continuing efforts were made to shift the production of refined oil products to the production of chemicals and specialty products. It accelerated construction of advanced capacity, promoted structural adjustment projects in an orderly manner and expedited the hydrogen supply projects. In the first three quarters of 2022, the Company processed 180 million tonnes of crude oil, down by 5.6% year-on-year. The output of refined oil products was 103 million tonnes, of which the diesel output increased by 4.7% year-on-year. The refining segment realised EBIT of RMB 20.645 billion in the first three quarters.

Refining	Unit	Nine-month period ended 30 September		Changes (%)
		2022	2021
Refinery throughput	million tonnes	180.07	190.73	(5.6)
Gasoline, diesel and kerosene production	million tonnes	103.07	108.60	(5.1)
Gasoline	million tonnes	44.98	49.07	(8.3)
Diesel	million tonnes	44.92	42.92	4.7
Kerosene	million tonnes	13.17	16.60	(20.7)
Light chemical feedstock production	million tonnes	32.21	33.71	(4.4)
Light product yield	%	73.95	73.72	0.23 percentage points
Refining yield	%	95.11	94.71	0.40 percentage points

Marketing and Distribution: In the face of unfavourable situation arising from sporadic COVID-19 outbreaks in different regions, the Company strengthened the integration of production and marketing, scientifically adjusted business strategy and dynamically optimized the resources allocation. Specifically, it seized the favorable opportunity resulting from the gradual recovery of demand and continuous standardization of market order in the third quarter to vigorously boost sales and profitability. The Company actively expanded low-sulphur bunker fuel operation, reinforced its market position, expanded the business scope, enhanced its brand power and improved the quality and profitability of non-fuel business. Efforts were made to accelerate sales network development, digitisation and its transformation into an integrated energy service provider of petrol, gas, hydrogen, power and services. In the first three quarters, domestic sales volume of refined oil products was 121.99 million tonnes, of which the sales volume for the third quarter was 43.53 million tonnes, up by 16.4% quarter-on-quarter. The marketing and distribution segment realised EBIT of RMB 23.154 billion in the first three quarters.

Marketing and Distribution	Unit	Nine-month period ended 30 September		Changes (%)
		2022	2021
Total sales volume of refined oil products	million tonnes	151.60	166.59	(9.0)
Total domestic sales volume of refined oil products	million tonnes	121.99	127.88	(4.6)
Retail	million tonnes	79.09	83.70	(5.5)
Direct sales & distribution	million tonnes	42.91	44.18	(2.9)
Annualised average throughput per station	tonnes/station	3,430	3,633	(5.6)

Chemicals: In the face of difficulty situation arising from high cost, high inventory and low margin in domestic chemical industrial chain, the Company closely monitored the changes in market demand, dynamically optimized the feedstock structure and the product mix, optimized utilization rate of facilities according to the profitability of different products, maintained high utilization rate in profitable facilities, and increased the production of EVA and BR. As a result, both of the production and profit of coal chemical business improved. The Company comprehensively enhanced the capacity of facilities in Zhenhai, Nangang of Tianjin, Hainan and Jiujiang. In the first three quarters, ethylene production reached 10 million tonnes, up by 2.6% year-on-year. It made relentless efforts to ensure sufficient supply to strategic customers, actively increased exports, and vigorously expanded into high-end markets. In the first three quarters, the total sales volume of chemical products was 60.40 million tonnes, representing a slight decrease year-on-year. Due to a sharp decline in gross profit margin of chemical products, the chemicals segment realised EBIT of RMB -1.061 billion in the first three quarters.

Chemicals	Unit	Nine-month period ended 30 September		Changes (%)
		2022	2021
Ethylene	thousand tonnes	10,002	9,752	2.6
Synthetic resin	thousand tonnes	13,790	14,002	(1.5)
Monomers and polymers for synthetic fibre	thousand tonnes	6,705	6,819	(1.7)
Synthetic fibre	thousand tonnes	834	1,031	(19.1)
Synthetic rubber	thousand tonnes	936	890	5.2

Note : Including 100% production of domestic joint ventures.

Capital expenditure: Capital expenditures in the first three quarters were RMB 104.0 billion, of which RMB 51.6 billion was spent in E&P segment, mainly for the crude oil capacity building in Shunbei and Tahe, natural gas capacity building in Chuanxi and Dongsheng, and the construction of storage and transportation facilities such as the relocation of Dongying crude oil depot and Longkou LNG projects; RMB 13.6 billion was spent in refining segment, mainly for Anqing and Yangzi refining upgrading projects and the phase two of Zhenhai refining and chemical projects; RMB 6.5 billion was spent in marketing and distribution segment, mainly for the upgrading of existing stations and construction of integrated energy stations integrating gasoline, gas, hydrogen, power and services, as well as logistics facilities; RMB 29.5 billion was spent in chemicals segment, mainly for Hainan and the Nangang ethylene projects in Tianjin, Jiujiang aromatics project, Zhenhai refining and chemical project phase II and Yizheng PTA project; RMB 2.8 billion was spent in corporate and others, mainly for construction of science and technology research and IT projects.

Appendix: Principal financial data and indicators
Principal financial data and indicators prepared in accordance with CASs

Units: RMB million
Items	As of 30 September 2022	As of 31 December 2021	Changes from the end of the preceding year to the end of the reporting period (%)
Total assets	2,050,519	1,889,255	8.5
Total equity attributable to equity shareholders of the Company	781,273	775,102	0.8

	Nine-month period ended 30 September		Year-on-year（%）
	2022	2021 (adjusted)
Net cash flow from operating activities	59,244	116,744	(49.3)
Operating income	2,453,322	2,001,691	22.6
Net profit attributable to equity shareholders of the Company	56,660	60,029	(5.6)
Net profit attributable to equity shareholders of the Company excluding extraordinary gains	55,452	58,720	(5.6)
Weighted average return on net assets (%)	7.28	7.89	(0.61) percentage points
Basic earnings per share (RMB)	0.468	0.496	(5.6)

Note: The Company has completed the purchase of non-equity assets and liabilities of Sinopec Group Asset Management Co., Ltd. and Sinopec Beijing Yanshan Petrochemical Co., Ltd. on 1 December 2021. Sinopec Yizheng Chemical Fibre Company Limited, a subsidiary of Sinopec Corp., has completed the purchase of non-equity assets and liabilities of Sinopec Group Asset Management Co., Ltd. on 1 December 2021. The transactions described above have been accounted as business combination under common control, thus, the Company retroactively adjusted the relevant financial data.

Principal financial data and indicators prepared in accordance with IFRS

Units: RMB million
Items	As of 30 September 2022	As of 31 December 2021	Changes from the end of the preceding year to the end of the reporting period (%)
Total assets	2,050,519	1,889,255	8.5
Total equity attributable to shareholders of the Company	780,394	774,182	0.8

	Nine-month period ended 30 September		Year-on-year（%）
	2022	2021 (adjusted)
Net cash generated from operating activities	59,244	116,744	(49.3)
Operating profit	75,886	85,025	(10.7)
Net profit attributable to shareholders of the Company	57,284	60,892	(5.9)
Basic earnings per share (RMB)	0.473	0.503	(5.9)
Return on net assets (%)	7.34	7.88	(0.54) percentage points

About Sinopec Corp.

Sinopec Corp. is one of the largest integrated energy and chemical companies in China. Its principal operations include the exploration and production, pipeline transportation and sale of petroleum and natural gas; the production, sale, storage and transportation of refinery products, petrochemical products, coal chemical products, synthetic fibre, and other chemical products; the import and export, including an import and export agency business, of petroleum, natural gas, petroleum products, petrochemical and chemical products, and other commodities and technologies; and research, development and application of technologies and information; hydrogen energy business and related services such as hydrogen production, storage, transportation and sales; battery charging and swapping, solar energy, wind energy and other new energy business and related services.

Disclaimer

This press release includes "forward-looking statements". All statements, other than statements of historical facts that address activities, events or developments that Sinopec Corp. expects or anticipates will or may occur in the future (including but not limited to projections, targets, reserve volume, other estimates and business plans) are forward-looking statements. Sinopec Corp.'s actual results or developments may differ materially from those indicated by these forward-looking statements as a result of various factors and uncertainties, including but not limited to the price fluctuation, possible changes in actual demand, foreign exchange rate, results of oil exploration, estimates of oil and gas reserves, market shares, competition, environmental risks, possible changes to laws, finance and regulations, conditions of the global economy and financial markets, political risks, possible delay of projects, government approval of projects, cost estimates and other factors beyond Sinopec Corp.'s control. In addition, Sinopec Corp. makes the forward-looking statements referred to herein as of today and undertakes no obligation to update these statements.

Investor Inquiries：Media Inquiries：
Beijing Hong Kong
Tel：(86 10) 5996 0028Tel：(852) 2522 1838
Fax：(86 10) 5996 0386Fax：(852) 2521 9955
Email：ir@sinopec.com Email sinopec@prchina.com.hk

SOURCE: China Petroleum & Chemical Corporation

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FAQ

What were Sinopec's operating income results for the first three quarters of 2022?

Sinopec reported an operating income of RMB 2.45 trillion, a 22.6% increase year-on-year.

How much did Sinopec's net profit change in the nine months ended September 30, 2022?

The net profit attributable to shareholders decreased by 5.6% to RMB 57.284 billion.

What was the change in basic earnings per share for Sinopec in 2022?

Basic earnings per share for Sinopec were RMB 0.473, down from RMB 0.503 in the previous year.

How did Sinopec's cash flow from operating activities perform in 2022?

Sinopec experienced a decline of 49.3% in net cash flow from operating activities.

What was the production level of crude oil for Sinopec in 2022?

Sinopec's domestic crude oil production reached 188 million barrels, up by 0.8% year-on-year.