Apr 29, 2021 07:07 PM

Sinopec Rebounds From Pandemic Plunge With $2.8 Billion First-Quarter Profit

A Sinopec gas station in Taiyuan, North China's Shanxi province, on Feb. 5. Photo: VCG
A Sinopec gas station in Taiyuan, North China's Shanxi province, on Feb. 5. Photo: VCG

China Petroleum & Chemical Corp. (600028.SH/0386.HK) posted net profits of 17.9 billion yuan ($2.8 billion) in the first quarter, as the country’s largest oil refiner joined a lengthening list of Chinese state-owned firms to rebound strongly from the Covid-19 pandemic.

The petrochemicals titan, also known as Sinopec, reversed losses of nearly 2 billion yuan in the equivalent period last year, when the coronavirus outbreak triggered a collapse in production and a slump in oil prices.

The Hong Kong- and Shanghai-listed company’s net gains were up 22% compared with the first three months of 2019, well before the pandemic started. Revenues grew a modest 4.1% year-on-year to 577 billion yuan.

China’s strong post-pandemic economic recovery drove steady demand for refined oil products and rapid growth in demand for natural gas and chemicals during the three months through March, Sinopec said in its earnings report filed to the Hong Kong Stock Exchange.

The disclosure adds Sinopec to an array of Chinese state-owned enterprises (SOEs) that have recorded bumper year-on-year profit rises from last year’s low base amid rampant demand and a supply squeeze in certain sectors.

Centrally administered SOEs tripled their net gains to 415.3 billion yuan during the first quarter, a record for the period and a rise of 31% from the first three months of 2019, China’s top SOE regulator said earlier this month.

More evidence of that trend emerged earlier this week when Baoshan Iron and Steel Co. Ltd. (600019.SH), the main listed subsidiary of state-owned China Baowu Steel Group Corp. Ltd., the world’s largest steelmaker, announced a 248% rise in net profits from the first quarter last year.

Also this week, Aluminum Corp. of China Ltd. (601600.SH/02600.HK), the top global producer of the metal, disclosed a record 30-fold year-on-year rise in net gains.

Resurgent oil prices boosted Sinopec’s revenue in the three months through March, the company said. The spot price of Brent crude averaged $60.90 per barrel during the period, up 21% compared with last year.

Despite the oil giant’s recent forays into the renewable energy sector — it plans to build thousands of hydrogen, battery changing and solar generation stations in the next five years — the majority of capital expenditure in the period went toward its traditional oil and gas interests.

Refining accounted for the largest increase in spending as the company splashed 7.6 billion yuan on projects such as pivoting its 180,000 barrels-per-day Anqing refinery toward petrochemical production and the expansion of subsidiary Sinopec Zhenhai Refining and Chemical Co. Ltd.

But the bulk of Sinopec’s outlays went on exploration and production, which rose 48% year-on-year to 9 billion yuan as the company expanded crude oil and natural gas capacity, and moved ahead with the construction of two liquefied natural gas receiving terminals.

The same part of the business booked an operating profit of 1.9 billion yuan in the first quarter, nearly five times the amount recorded in the equivalent period last year, according to the earnings report.

Oil sales made first-quarter operating profits of 8 billion yuan against last year’s loss of 2.6 billion yuan, the report says. Chemicals brought in net gains of 6.8 billion yuan versus last year’s shortfall of 1.9 billion yuan.

Sinopec said it produced 117 million barrels of oil and gas equivalent in the first quarter, up 4.2% on last year. Natural gas production stood at 291.6 billion cubic feet, a 16.8% year-on-year rise.

The company posted an annual net profit of 32.9 billion yuan last year, a 43% decline on 2019, according to its annual report filed earlier this month.

The price of Sinopec’s Hong Kong-listed shares closed up 1.8% at HK$3.96 ($0.51) on Thursday. Its Shanghai shares ended the day at 4.28 yuan, a rise of 0.94%.

Sinopec’s nearest rival, China National Petroleum Corp. — better known as PetroChina, the name of its listed arm — is expected to release quarterly earnings on Friday.

Timmy Shen contributed reporting.

Contact reporter Matthew Walsh ( and editor Flynn Murphy (

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