Sinopec's Net Profit for 2020 Q3 Reached RMB 23.507 Billion Campaign of Continuously Tiding Over Difficulties and Improving Performances Achieves Favorable Results with Significant Improvement of Operation and Profitability

Rhea-AI Summary

Sinopec Corp. reported a net profit of RMB 23.507 billion for Q3 2020, showing significant operational improvement despite global economic challenges from COVID-19. Operating income for the first three quarters reached RMB 1.5546 trillion, with a net profit of RMB 24.459 billion per IFRS. Oil and gas production, refinery throughput, and total sales all increased quarter on quarter. The company's cash from operations rose by 2.8% year on year, with cash and equivalents standing at RMB 87.086 billion as of September 30, 2020. Sinopec's liability-to-asset ratio was maintained at 51.7%, indicating a robust financial position.

Positive

• Net profit for Q3 2020 reached RMB 23.507 billion, indicating strong profitability.
• Operating income increased to RMB 1.5546 trillion for the first three quarters.
• Quarterly operating profit surged by 38.2% year on year to RMB 26.53 billion.
• Cash and cash equivalents amounted to RMB 87.086 billion as of September 30, 2020.
• Sinopec's liability-to-asset ratio remained stable at 51.7%.

Negative

• Operating income decreased by 30.4% year on year for the first nine months.
• Net profit attributable to equity shareholders fell by 45.7% compared to the previous year.

Sinopec's Net Profit for 2020 Q3 Reached RMB23.507 Billion

Campaign of Continuously Tiding Over Difficulties and Improving Performances Achieves Favorable Results with Significant Improvement of Operation and Profitability

HONG KONG, CHINA / ACCESSWIRE / October 28 2020 / China Petroleum & Chemical Corporation ("Sinopec Corp." or the "Company") (HKEX: 00386)(SSE:600028)(NYSE:SNP)today announced its unaudited results for the nine months ended 30 September 2020.

Financial Highlights

• In accordance with the CAS, the Company's operating income in the first three quarters was 1.5546 trillion and net profit attributable to equity shareholders of the Company was 23.507 billion. In accordance with IFRS, net profit attributable to shareholders of the Company was RMB 24.459 billion and the basic earnings per share were RMB 0.202.

• In the third quarter, the Company achieved significant improvement of operating and profitability. Oil and gas production, refinery throughput, total domestic sales volume of refined oil products and total chemical products sales volume recorded quarter on quarter increase and operating profit was 26.53 billion, representing a year on year increase of 38.2%.

• In accordance with IFRS, the Company's liability-to-asset ratio as of 30 September 2020 was 51.7%, maintaining a sound financial position.Net cash generated from operating activities up by 2.8% year on year. Cash and cash equivalents amounted to RMB 87.086 billion as at 30 September 2020.

Operating Review

In the first three quarters of 2020, due to the worldwide spread of COVID-19, global economy was depressed and the global market was shrinking. The growth of China's economy turned positive, with GDP up by 0.7% year-on-year in the first three quarters, among which up by 4.9% in the third quarter, indicating a good continuous recovery momentum. In the first three quarters of 2020, the average spot price of Platts Brent was USD 42.5 per barrel, down by 34.4% year on year. Domestic demand for natural gas and chemical products maintained growth and demand for refined oil products recovered steadily quarter on quarter.

Confronted with the severe and complex market situation, the Company adhered to the principles of "focusing on main challenges, system optimization, bottom-line risks prevention and control and seizing opportunities out of crisis" and vigorously adjusted structure, expanded market, reduced inventory and tapped potential. On the basis of favorable results of "100-day campaign to tide over difficulties and improve performances", the Company launched a higher standard campaign of continuously tiding over difficulties and improving performances, seized the opportunity of domestic market demand recovery and made all-out efforts to tide over the difficulties of pandemic along with low crude oil price and achieved significant improvement of operation and profitability. The Company completed the transaction of oil and gas pipeline assets on 30 September 2020 and the contribution of asset appreciation to earnings was booked in the third quarter.

Exploration and Production: Under low crude oil price environment, the Company insisted on high-quality exploration, focused on profit-driven development, accelerated capacity building and proactively expanded market and sales of natural gas and further deepened the maintaining oil production, increasing gas output and reducing cost. In exploration, new discoveries were made in Tarim Basin, Jiyang Depression and Sichuan Basin, etc. In oil development, we increased the application of technologies to lower cost and optimized projects implementation plan, which helped to further decrease our cost. In natural gas development, we accelerated capacity building in West Sichuan, Dongsheng and Weirong gas fields, and continuously progressed with the development of Fuling, Puguang and Yuanba gas fields. In the first three quarters, domestic crude production kept stable and sales of natural gas increased by 9.86% year on year, realizing a continued growth in market share of natural gas. The exploration and production segment realised earnings before interest and taxes (EBIT) of RMB 13.16 billion in the third quarter.

Exploration and Production	Unit	Nine-month period ended 30 September		Changes
		2020	2019	(%)
Oil and gas production	million boe	339.39	341.74	(0.7)
Crude oil production	million barrels	210.65	212.78	(1.0)
China	million barrels	186.69	186.69	0.0
Overseas	million barrels	23.96	26.09	(8.2)
Natural gas production	billion cubic feet	772.14	773.41	(0.2)
Realised crude oil price	USD/barrel	38.24	58.82	(35.0)
Realised natural gas price	USD/thousand cubic feet	5.32	6.19	(14.1)

Conversion: For domestic production of crude oil, 1 tonne = 7.10 barrels. For overseas production of crude oil, 1 tonne = 7.21 barrels. For production of natural gas, 1 cubic meter = 35.31 cubic feet.

Refining: With the market oriented approach, the Company took advantage of the recovery of domestic demand in the third quarter, further integrated production and marketing, maintained high utilization rates of facilities and maximized the profitability of value chain. We dynamically adjusted product mix, increased the supply of chemical feedstock and increased production of asphalt, lubricant and other marketable products. We optimized crude oil procurement and decreased cost. In the third quarter, refinery throughput was 63.51 million tonnes, up by 11.0% quarter on quarter and 1.9% year on year and 38.01 million tonnes of refined oil products were produced, representing a quarter-on-quarter increase of 11.2%, and 10.53 million tonnes of light chemical feedstock were produced, representing a quarter-on quarter increase of 15.0% and a year-on-year increase of 5.3%. The refining segment realized EBIT of RMB 31.55 billion in the third quarter.

Refining	Unit	Nine-month period ended 30 September		Changes (%)
		2020	2019
Refinery throughput	million tonnes	174.46	186.26	(6.3)
Gasoline, diesel and kerosene production	million tonnes	105.19	119.54	(12.0)
Gasoline	million tonnes	42.46	47.20	(10.0)
Diesel	million tonnes	47.86	49.01	(2.3)
Kerosene	million tonnes	14.87	23.33	(36.3)
Light chemical feedstock production	million tonnes	29.54	30.05	(1.7)
Light product yield	%	74.63	76.44	(1.81) percentage points
Refining yield	%	94.89	94.99	(0.10) percentage points

Note : Including 100% production of domestic joint ventures.

Marketing and Distribution: Facing fierce market competition, the Company strengthened market analysis, leveraged the advantages of integration, balanced volume and profit, expanded sales and increased profit, and achieved continuous recovery in sales volume. We innovated marketing model by introducing the "one click refueling", etc., promoted the integration of online and offline business, created a new service model of reducing physical contact while refueling and shopping in a more efficient and convenient way to constantly improve our services. In the third quarter, domestic sales volume of refined oil products was 45.44 million tonnes, up by 0.4% quarter on quarter. The marketing and distribution segment realized EBIT of RMB 18.24 billion in the third quarter.

Marketing and Distribution	Unit	Nine-month period ended 30 September		Changes (%)
		2020	2019
Total sales volume of refined oil products	million tonnes	162.25	192.42	(15.7)
Total domestic sales volume of refined oil products	million tonnes	123.19	139.25	(11.5)
Retail	million tonnes	83.06	91.80	(9.5)
Direct sales & Distribution	million tonnes	40.13	47.45	(15.4)
Annualised average throughput per station	tonnes/station	3,605	3,991	(9.7)

Note: The total sales volume of refined oil products includes the amount of trading volume.

Chemicals: The Company fine-tuned chemical feedstock mix to further lower costs, optimized operation and product slate, increased the ratio of high value-added products with the ratio of new and specialty synthetic resin reaching 68.6% and ratio of high value-added synthetic rubber reaching 31.3%. Construction of key projects was accelerated. In the third quarter, ethylene output was 3.07 million tonnes, up by 11.8% quarter-on-quarter. We accelerated expanding high-end products market, such as medical resin, antibacterial materials and automotive material etc. and optimized layout and logistics operation to enhance profitability of business chain. In the third quarter, the total chemical sales volume was 22.33 million tonnes, up by 0.86% quarter on quarter. The chemical segment realized EBIT of RMB 4.22 billion in the third quarter.

Chemicals	Unit	Nine-month period ended 30 September		Changes (%)
		2020	2019
Ethylene	thousand tonnes	8,850	9,295	(4.8)
Synthetic resin	thousand tonnes	12,773	12,749	0.2
Monomers and polymers for synthetic fibre	thousand tonnes	6,711	7,511	(10.7)
Synthetic fibre	thousand tonnes	935	968	(3.4)
Synthetic rubber	thousand tonnes	790	794	(0.5)

Note : Including 100% production of domestic joint ventures.

Capital expenditure: Focusing on quality and profitability of investment, the Company continuously optimised our investment projects. In the first three quarters, total capital expenditures were RMB 71.858 billion. Capital expenditures for the exploration and production segment were RMB 32.172 billion, mainly for capacity building in Shengli, Northwest, West Sichuan and Dongsheng oil and gas projects. Capital expenditures for the refining segment were RMB 13.819 billion, mainly for Zhongke project, Zhenhai, Tianjin, Maoming and Luoyang refining upgrading projects. Capital expenditures for the marketing and distribution segment were RMB 13.768 billion, mainly for construction of service stations, oil products depots and non-fuel business development. Capital expenditures for the chemicals segment were RMB 10.458 billion, mainly for Zhongke, Zhenhai, and Gulei, ethylene revamping for Sinopec-SK and Jiujiang aromatics projects, and melt blown fabrics projects. Capital expenditures for corporate and others were RMB 1.641 billion, mainly for R&D facilities and IT application 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 2020				As of 31 December 2019				Changes from the end of the preceding year to the end of the reporting period (%)
Total assets			1,799,388				1,755,071				2.5
Total equity attributable to equity shareholders of the Company			729,179				739,169				(1.4	)

		7-9' 2020				Year-on-year(%)				1-9' 2020				Year-on-year(%)
Net cash flow from operating activities			43,845				(9.6	)			83,639				2.8
Operating income			520,371				(29.1	)			1,554,617				(30.4	)
Net profit attributable to equity shareholders of the Company			46,389				288.4				23,507				(45.7	)
Net profit attributable to equity shareholders of the Company excluding extraordinary gains and losses			14,147				27.5				(10,257	)			-
Basic earnings per share (RMB)			0.383				288.4				0.194				(45.7	)

Principal financial data and indicators prepared in accordance with IFRS

	Units: RMB million
Items		As of 30 September 2020				As of 31 December 2019				Changes from the end of the preceding year to the end of the reporting period (%)
Total assets			1,799,388				1,755,071				2.5
Total equity attributable to shareholders of the Company			728,198				738,150				(1.3	)

		7-9' 2020				Year-on-year(%)				1-9' 2020				Year-on-year(%)
Net cash generated from operating activities			43,845				(9.6	)			83,639				2.8
Operating profit			26,529				38.2				5,028				(92.6	)
Net profit attributable to shareholders of the Company			46,184				284.2				24,459				(44.7	)
Basic earnings per share (RMB)			0.381				284.2				0.202				(44.7	)

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 sale, storage and transportation of petroleum products, petrochemical products, coal chemical products, synthetic fibre, fertiliser 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.

Sinopec sets 'fueling beautiful life' as its corporate mission, puts 'people, responsibility, integrity, precision, innovation and win-win' as its corporate core values, pursues strategies of value-orientation, innovation-driven development, integrated resource allocation, open cooperation, and green and low-carbon growth, and strives to achieve its corporate vision of building a world leading energy and chemical company.

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 volu

FAQ

What were Sinopec's Q3 2020 net profits?

Sinopec reported a net profit of RMB 23.507 billion for Q3 2020.

How did Sinopec's operating income change in 2020?

Sinopec's operating income for the first three quarters was RMB 1.5546 trillion, down 30.4% year on year.

What is Sinopec's cash position as of September 30, 2020?

As of September 30, 2020, Sinopec had cash and cash equivalents of RMB 87.086 billion.

What was Sinopec's liability-to-asset ratio in Q3 2020?

Sinopec maintained a liability-to-asset ratio of 51.7% as of September 30, 2020.

How much did Sinopec's net profit fall in 2020?

Net profit attributable to equity shareholders fell by 45.7% in 2020.