Chinese refiner Sinopec 1H profit up 12 percent

[August 29, 2011]  SHANGHAI (AP) -- Sinopec, Asia's largest refiner by capacity, said first-half profit rose 12 percent as higher oil, gas and chemicals revenues helped offset a loss in its refining business.

The company, also known as China Petroleum & Chemical Corp., said Sunday that its net profit in January-June was 41.2 billion yuan ($6.4 billion), or 0.475 yuan (7 U.S. cents) per share, based on international financial reporting standards.

The results were better than analysts had forecast. Profit a year earlier was 36.8 billion yuan.

The company attributed the improvement to higher oil and chemicals prices and better integration of its upstream and downstream businesses. But it said the outlook for coming months was uncertain.

"We are and we will be facing a complicated macro-environment," said Sinopec's chairman Fu Chengyu, noting the impact of the economic problems in the United States and Europe on the global recovery.

The 44 percent increase in global crude oil prices in the first half of the year was both a help and a hindrance. While Sinopec's revenue surged 31.7 percent in January-June to 1.2 trillion yuan ($187.5 billion), buoyed by strong sales of oil, gas and chemicals, higher costs for imported crude oil pulled its refining business into loss.

China's controls on fuel prices have left refiners constantly battling losses as global prices have fluctuated.

The company's refining unit posted a 12.2 billion yuan ($1.9 billion) loss in the first half, compared with profit of 5.7 billion yuan in the same period a year earlier.

With crude oil prices now in retreat, Sinopec's refineries could see improved results later in the year, Citi analyst Graham Cunningham said in a report Monday.

"We believe there is a strong possibility the government could move ahead with a more liberal pricing mechanism for gasoline and diesel if oil prices moderate and domestic inflation begins to come down," he said.

Sinopec said its crude oil output fell 5.4 percent to 156.3 million barrels, as maintenance of machinery in its oil fields in Angola forced a sharp cutback in production. Its natural gas output rose 27 percent to 253.88 billion cubic feet (7.19 billion cubic meters).

[Associated Press]

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