Sinopec Corp. Announces 2008 Interim Results

Sun Aug 24, 2008 2:02pm EDT

* Reuters is not responsible for the content in this press release.

BEIJING--(Business Wire)--
China Petroleum & Chemical Corporation ("Sinopec Corp." or "the
Company") (HKEX: 386; NYSE: SNP; LSE: SNP; CH: 600028) today announced
its interim results for the six months ended 30 June, 2008.

   Under PRC accounting standards for business enterprises, the
Company's operating income increased by 30.3% to RMB 734.783 billion
in the first half of 2008. Net profit attributable to the equity
shareholders of the parent company decreased 73.4% year on year to RMB
9.339 billion.

   Under International Financial Reporting Standards (IFRS), the
Company's turnover with other operating revenues and income increased
by 36.2% year on year to RMB 768.185 billion in the first half of
2008. Profit attributable to shareholders of the Company decreased
77.3% year on year to RMB 8.255 billion.

   The Board of Directors proposed an interim dividend of RMB 0.03
per share.

   In the first half of 2008, confronted with complicated and severe
conditions resulting from soaring crude oil prices, tight price
controls on oil products in the domestic market and rising prices of
chemical products driven by increased raw materials cost, the Company
managed to increase oil and gas production, speed up structural
adjustments, took a variety of measures to increase the supply of oil
products and made efforts to guarantee the domestic market supply of
oil products through optimised production and operation activities,
improved management, conserving energy and reducing emissions, and
realized steady growth in oil and gas production, refinery throughput,
sales volume of oil products and the production of major chemical
products. In coping with the exceptional snow storms in South China as
well as the magnitude 8 earthquake in Wenchuan County in Sichuan
Province on 12 May 2008, the Company promptly activated its
contingency plan to guarantee the supply of refined oil products in
the disaster-stricken areas. The company fully honored its social
responsibility by actively donating goods and money to support the
rescue work and reconstruction of the disaster-stricken areas.

   Operating Highlights

   Financial Data and Indicators Prepared in Accordance with the PRC
Accounting Standards for Business Enterprises

-0-
*T
Items                      At 30 June    At 31 December  Change from
                               2008            2007       the end of
                                                           last year
                          --------------------------------------------
                            RMB millions    RMB millions           (%)
----------------------------------------------------------------------
Total assets                     820,556         718,572          14.2
----------------------------------------------------------------------
Shareholders' equity
 attributable to equity
 shareholders of the
 Company                         305,471         300,949           1.5
----------------------------------------------------------------------
Net assets per share
 (RMB) (Fully diluted)             3.523           3.471           1.5
----------------------------------------------------------------------
Adjusted net assets per
 share (RMB)                       3.437           3.391           1.4
----------------------------------------------------------------------
*T

-0-
*T
Items                                                    Change over
                                                           the same
                          Six-month period ended 30 June   period of
                                                              the
                                                           preceding
                                                              year
                          --------------------------------------------
                                    2008            2007
                            RMB millions    RMB millions           (%)
----------------------------------------------------------------------
Operating (loss) / profit       (23,784)          53,285       (144.6)
----------------------------------------------------------------------
Profit before taxation             9,516          52,701        (81.9)
----------------------------------------------------------------------
Net profit attributable
 to equity shareholders
 of the Company                    9,339          35,110        (73.4)
----------------------------------------------------------------------
Net (loss) / profit
 before extraordinary
 gain and loss                  (17,445)          34,924       (150.0)
----------------------------------------------------------------------
Return on net assets (%)                                        (9.25)
                                                           percentage
                                    3.06           12.31        points
----------------------------------------------------------------------
Basic earnings per share
 (RMB)                             0.108           0.405        (73.4)
----------------------------------------------------------------------
Basic (loss) / earnings
 per share before
 extraordinary gain and
 loss (RMB)                      (0.201)           0.403       (150.0)
----------------------------------------------------------------------
Diluted earnings per
 share (RMB)                       0.076           0.405        (81.0)
----------------------------------------------------------------------
Net cash flow from
 operating activities              5,986          64,700        (90.7)
----------------------------------------------------------------------
Net cash flow from
 operating activities per
 share (RMB)                       0.069           0.746        (90.7)
----------------------------------------------------------------------
*T

   Financial Data and Indicators Prepared in Accordance with the IFRS

-0-
*T
Items                     Six-month period ended 30 June Change over
                          ------------------------------   the same
                                                           period of
                                                              the
                                                           preceding
                                    2008            2007      year
                          --------------------------------------------
                            RMB millions    RMB millions           (%)
----------------------------------------------------------------------
Operating profit                   7,222          53,584        (86.5)
----------------------------------------------------------------------
Profit attributable to
 equity shareholders of
 the Company                       8,255          36,375        (77.3)
----------------------------------------------------------------------
Return on capital                                               (6.88)
 employed (%)                                              percentage
                                    1.33            8.21        points
----------------------------------------------------------------------
Basic earnings per share
 (RMB)                             0.095           0.420        (77.3)
----------------------------------------------------------------------
Diluted earnings per
 share (RMB)                       0.064           0.420        (84.8)
----------------------------------------------------------------------
Net cash flow generated
 from operating
 activities                        2,640          62,295        (95.8)
----------------------------------------------------------------------
Net cash flow generated
 from operating
 activities per share
 (RMB)                             0.030           0.718        (95.8)
----------------------------------------------------------------------
*T

   * Return on capital employed = operating profit x (1 - income tax
rate)/capital employed

-0-
*T
Items                      At 30 June    At 31 December  Change from
                               2008            2007       the end of
                                                           last year
                          --------------------------------------------
                            RMB millions    RMB millions           (%)
----------------------------------------------------------------------
Total assets                     838,469         732,725          14.4
----------------------------------------------------------------------
Total equity attributable
 to equity shareholders
 of the Company                  310,871         307,433           1.1
----------------------------------------------------------------------
Net assets per share
 (RMB)                             3.586           3.546           1.1
----------------------------------------------------------------------
Adjusted net assets per
 share (RMB)                       3.499           3.466           1.0
----------------------------------------------------------------------
*T

   Operating Results by Segment (IFRS)

-0-
*T
                          Six-month period ended 30 June        Change
                          ------------------------------
                                    2008            2007
                         ---------------------------------------------
                                   RMB millions                    (%)
----------------------------------------------------------------------
Exploration and
 Production Segment
----------------------------------------------------------------------
  Operating revenues              96,659          62,724          54.1
----------------------------------------------------------------------
  Operating expenses              69,561          39,974          74.0
----------------------------------------------------------------------
  Operating profit                27,098          22,750          19.1
----------------------------------------------------------------------
Refining Segment
----------------------------------------------------------------------
  Operating revenues             420,082         307,894          36.4
----------------------------------------------------------------------
  Operating expenses             466,103         302,164          54.3
----------------------------------------------------------------------
  Operating (loss)
   /profit                      (46,021)           5,730             -
----------------------------------------------------------------------
Marketing and
 Distribution Segment
----------------------------------------------------------------------
  Operating revenues             396,459         308,547          28.5
----------------------------------------------------------------------
  Operating expenses             374,125         291,752          28.2
----------------------------------------------------------------------
  Operating profit                22,334          16,795          33.0
----------------------------------------------------------------------
Chemicals Segment
----------------------------------------------------------------------
  Operating revenues             132,005         115,720          14.1
----------------------------------------------------------------------
  Operating expenses             127,472         107,178          18.9
----------------------------------------------------------------------
  Operating profit                 4,533           8,542        (46.9)
----------------------------------------------------------------------
Corporate and others
----------------------------------------------------------------------
  Operating revenues             411,237         202,348         103.2
----------------------------------------------------------------------
  Operating expenses             411,959         202,581         103.4
----------------------------------------------------------------------
  Operating loss                   (722)           (233)             -
----------------------------------------------------------------------
*T

   MARKET ENVIRONMENT AND BUSINESS REVIEW

   In the first half of 2008, the Chinese economy continued to grow
steadily and rapidly, with a GDP growth rate of 10.4%. Apparent
domestic consumption of oil products (inclusive of gasoline, diesel
and kerosene) and ethylene equivalent consumption increased by 13.9%
and 2.5% respectively over the same period of last year.

   In the first half of 2008, confronted with complicated and severe
conditions resulting from soaring crude oil prices, tight price
controls on oil products in the domestic market and rising prices of
chemical products driven by increased raw materials cost, the Company
managed to increase oil and gas production, speed up structural
adjustments, took a variety of measures to increase the supply of oil
products and made efforts to guarantee the domestic market supply of
oil products through optimised production and operation activities,
improved management, conserving energy and reducing emissions, and
realized steady growth in oil and gas production, refinery throughput,
sales volume of oil products and the production of major chemical
products.

   BUSINESS REVIEW

   1 PRODUCTION AND OPERATIONS

   (1) Exploration and Production

   In the first half of 2008, international crude oil prices soared,
and the average Platt's Brent spot price was US$ 109.14/barrel, up by
72.53% over the same period of last year.

   The Company made new progress in petroleum exploration in Tahe oil
field, in natural gas exploration in the surrounding areas of Puguang
gas field in northeastern Sichuan, western Sichuan and the southern
area in Songlao basin, and in the exploration of concealed oil and
natural gas reserves in the matured fields in the east of China.

   With respect to development, through such measures as
strengthening the comprehensive adjustments in the matured fields,
optimising the construction process of production capacity in the new
blocks and enhancing the development of low-grade reserves and
speeding up the pace of increasing recovery rate, the Company has
yielded marked achievements in increasing both oil and gas reserves
and production. Moreover, the construction of the Sichuan-East China
Gas project has been progressing smoothly. In the first half of this
year, the Company produced 147.38 million barrels of crude oil, up by
2.4%, and produced 144.2 billion cubic feet of natural gas, up by 3.3%
over the same period of last year.

   Summary of Operations of Exploration and Production Segment

-0-
*T
                          Six-month period ended 30 June    Change
                          --------------------------------------------
                                    2008            2007           (%)
----------------------------------------------------------------------
Crude oil production
 (mmbbls)                         147.38          143.88           2.4
----------------------------------------------------------------------
Natural gas production
 (bcf)                             1,442           1,396           3.3
----------------------------------------------------------------------
Newly added proved
 reserve of crude oil
 (mmbbls)                         158.74          147.88           7.3
----------------------------------------------------------------------
Newly added proved
 reserve of natural gas
 (bcf)                             1,869           1,586          17.8
----------------------------------------------------------------------
*T

-0-
*T
                                                     increase/decrease
                                              At 31    (%) compared
                              At 30 June    December  with the end of
                                    2008        2007     last year
----------------------------------------------------------------------
Proved reserve of crude
 oil (mmbbls)                      3,035       3,024               0.4
----------------------------------------------------------------------
Proved reserve of natural
 gas (bcf)                        63,736      63,308               0.7
----------------------------------------------------------------------
*T

   Note: Crude oil production is converted at 1 tonne = 7.1 barrels,
and natural gas production is converted at 1 cubic meter = 35.31 cubic
feet.

   (2) Refining

   In the first half of 2008, in order to meet market demand, the
Company kept refinery facilities running safely and at full capacity
and increased the output of oil products. It also optimized crude oil
resources and tried to reduce the purchasing cost of crude oil,
reinforced structural adjustment of products mix and increased the
production of high value- added products such as high-grade gasoline,
vigorously promoted the sales of other petroleum products rather than
gasoline, diesel or kerosene, produced clean oil products meeting the
national IV standard. As a cooperation partner of the 2008 Beijing
Olympic Games, the Company provides oil products in major hosting
cities. In the first half of the year, the refinery throughput
increased by 6.7% over the same period of last year, and the output of
oil products increased by 10.1%, among which, gasoline increased by
7.7% and diesel by 13.0% over the same period of last year.

   Summary of Operations of Refining Segment

-0-
*T
                                 Six-month period               Change
                                  ended 30 June
                          --------------------------------------------
                                    2008            2007           (%)
----------------------------------------------------------------------
Refinery throughput
 (million tonnes)                  84.25           78.94           6.7
----------------------------------------------------------------------
Gasoline, diesel and
 kerosene production
 (million tonnes)                  51.52           46.80          10.1
----------------------------------------------------------------------
Of which: Gasoline
 (million tonnes)                  13.78           12.79           7.7
----------------------------------------------------------------------
            Diesel
             (million
             tonnes)               33.80           29.91          13.0
----------------------------------------------------------------------
            Kerosene
             including
             jet fuel
             (million
             tonnes)                3.94            4.10         (3.9)
----------------------------------------------------------------------
Light chemical feedstock
 (million tonnes)                  12.07           12.26         (1.5)
----------------------------------------------------------------------
Light products yield (%)                                          0.75
                                                           percentage
                                   74.68           73.93         point
----------------------------------------------------------------------
Refinery yield (%)                                                0.14
                                                           percentage
                                   93.87           93.73         point
----------------------------------------------------------------------
*T

   Note: Refinery throughput is converted at 1 tonne = 7.35 barrels

   (3) Marketing and Distribution

   In the first half of 2008, the Company constantly optimised its
sales networks, intensified service awareness and improved service
quality, collected resources through various channels and timely
arranged the imports of oil products, optimised the allocation and
transport of oil products, reduced transportation cost and managed to
guarantee sufficient supply of oil products in the domestic market and
actively promoted sales of oil products with high octane number. The
total sale volume of refined oil reached 63 million tonnes, increased
by 8.8% compared with that of the same period last year, among which
retail increased 19.2% over the same period of last year. In its
coping with the exceptional snow storms in South China as well as the
earthquake in Wenchuan, the Company promptly activated its contingency
plan to guarantee the supply of refined oil products, and adopted such
methods as movable gas-filling and manual delivery of oil products,
thus ensuring the supply of refined oil products in the
disaster-stricken areas.

   Summary of Operations of Marketing and Distribution Segment

-0-
*T
                                 Six-month period               Change
                                  ended 30 June
                          --------------------------------------------
                                    2008            2007           (%)
----------------------------------------------------------------------
Total domestic sales
 volume of refined oil
 products (million
 tonnes)                           63.02           57.92           8.8
----------------------------------------------------------------------
Of which: Retail volume
 (million tonnes)                  42.91           36.01          19.2
----------------------------------------------------------------------
           Direct sales
            volume
            (million
            tonnes)                10.37           10.15           2.2
----------------------------------------------------------------------
           Wholesale
            volume
            (million
            tonnes)                 9.73           11.77        (17.3)
----------------------------------------------------------------------
Total number of service
 stations                         29,188          28,898           1.0
----------------------------------------------------------------------
of which: Number of
 company-operated service
 stations                         28,551          28,153           1.4
----------------------------------------------------------------------
           Number of
            franchised
            service
            stations                 637             745        (14.5)
----------------------------------------------------------------------
Annualized throughput per
 station (tonne)                   3,006           2,558          17.5
----------------------------------------------------------------------
*T

   (4) Chemicals

   In the first half of 2008, the Company took advantage of
concentrated sales and made great effort to expand the chemical
market, coped with the market changes in a flexible way and organised
the production and sales of products in high demand, endeavored to
increase profits, improved management, consolidated raw material and
product structure optimisation, vigorously promoted new technologies
and tried hard to increase the output of high added-value products.
Ethylene output reached 3.307 million tonnes, a 1.0% increase
year-on-year, and the production of synthetic resin reached 4.923
million tonnes, an increase of 3.1% over the same period of last year.
Synthetic rubber production reached 0.46 million tonnes, up by 27.8%
over the same period of last year.

-0-
*T
Summary of Production of
 Major Chemical Products                            Unit: 1,000 tonnes
----------------------------------------------------------------------
                                 Six-month period               Change
                                  ended 30 June
                          --------------------------------------------
                                    2008            2007           (%)
----------------------------------------------------------------------
Ethylene                           3,307           3,273           1.0
----------------------------------------------------------------------
Synthetic resins                   4,923           4,774           3.1
----------------------------------------------------------------------
Synthetic fiber monomers
 and polymers                      3,768           3,938         (4.3)
----------------------------------------------------------------------
Synthetic fiber                      681             721         (5.5)
----------------------------------------------------------------------
Synthetic rubbers                    460             360          27.8
----------------------------------------------------------------------
Urea                                 685             813        (15.7)
----------------------------------------------------------------------
*T

   Note: 100% production of two ethylene joint ventures, namely
BASF-YPC and SHANGHAI SECCO was included

   2 COST SAVINGS

   In the first half of 2008, the Company took various measures to
reduce costs, including: fully leveraging the modern logistics system
to optimise resources allocation and reduce transportation costs,
tapping the potentials of refining capacities for lower quality crude,
reducing purchasing costs of crude oil, optimizing operation of
facilities and reducing energy and material consumption. In the first
half of 2008, the Company saved RMB 1.703 billion in cost with the
Exploration and Production, Refining, Marketing and Distribution and
Chemicals achieving cost savings of RMB 577 million, RMB 341 million,
RMB 315 million and RMB 470 million respectively.

   3 ENERGY SAVINGS AND EMISSION REDUCTIONS

   In the first half of 2008, the Company made remarkable
achievements in energy savings and emission reductions. It established
SINOPEC Energy-saving Monitoring Center and Energy-saving Technical
Service Center, introduced a reporting system on energy-saving
activities, initiated benchmarking activities for assessing energy
efficiencies within the industry, continued to conduct the publicising
and education work of energy-saving and emission reduction, vigorously
promoted such advanced energy-saving technologies as pulsed electric
desalting, and aromatics extraction of pygas. In the first half of
this year, the Company's energy intensity, industrial water
consumption and COD in discharged waste water dropped by 6.6%, 11.8%
and 15.0%, respectively over the same period of last year.

   4 CAPITAL EXPENDITURE

   In the first half of 2008, the Company's total capital expenditure
was RMB 36.536 billion. Among which, capital expenditure for
Exploration and Development was RMB 20.981 billion. The newly-built
production capacity of crude oil and natural gas was 2.79 million
tonnes and 480 million cubic-meters per year respectively. The capital
expenditure for Refining was RMB 3.849 billion as the green-field and
expansion refinery projects in Qingdao, Gaoqiao, Wuhan and Luoyang
have been put into production. The Caofeidian crude oil jetty project
achieved mechanical completion. Capital expenditure in Chemicals was
RMB 5.907 billion. The Yangzi Petrochemicals Butadiene project with a
capacity of 100,000 tonnes per year was put into operation, and the
Tianjin, Zhenhai ethylene and Jinling PX projects were underway as
scheduled. Capital expenditure in Marketing and Distribution was RMB
4.548 billion. The sales network of oil products was furthered
optimised and 195 new service stations were added. Capital expenditure
for Corporate and Others amounted to RMB 1.251 billion.

   BUSINESS PROSPECTS

   Looking into the second half of 2008, the Company believes that
China's economy will maintain growth momentum and that international
prices of crude oil will remain high. It also believes that the
domestic refining business will still be under pressure and that the
demand growth for chemical products may slow down.

   In the second half of this year, the Company shall continue to
apply flexible operational strategies, intensity management and make
optimal arrangement for various production and operation activities.

   In Exploration and Development, the Company will speed up
exploration in such key regions as Tahe and northeastern Sichuan,
actively tap the potential of existing oil fields, and further improve
its recovery rate. In the second half of 2008, the Company plans to
produce 21.24 million tonnes of crude oil and 4.2 billion cubic meters
of natural gas.

   In Refining, the Company shall continue to operate at its full
capacity on the basis of ensuring safe and stable production to ensure
market supplies, optimise the purchase and allocation of crude oil
resources, make efforts to reduce the costs of crude oil, further
adjust product structure and increase the output of high value-added
products. In the second half of 2008, the Company plans to refine
89.75 million tonnes of crude oil.

   In Marketing and Distribution, the Company will continue to
meticulously organise the allocation and transport of refined oil,
make efforts to guarantee the market supplies of refined oil products
and ensure the oil supplies for the Olympic Games and the
reconstruction of disaster-stricken areas and key industries.
Meanwhile, the Company shall intensify the arrangement of resources,
optimise the flow and storage and transportation of resources and
improve profitability from the sales. In the second half of 2008, the
Company plans to a total domestic sales volume of oil products at 64
million tonnes.

   In Chemicals, the Company shall optimise raw materials, product
structure and unit operation, intensify the implementation of saving
energy and materials, consolidate the linkage of production, sales and
research, promote developments of new products, and increase the
production of high value-added products. In the second half of 2008,
the Company plans to produce 3.26 million tonnes of ethylene.

   In the second half of 2008, we shall continue to optimise our
production and operation activities, improve management, increase
profit through taping potentials, reduce energy consumption and
emissions, and strive to fulfill the production and business goals of
the whole year.

   Notice:

   Sinopec Corp. will announce its 2008 interim results at
www.sinopec.com and in major newspapers on 25 August, 2008. An
archived webcast to discuss Sinopec Corp.'s 2008 interim results will
be posted on 26 August on the Company's website www.sinopec.com.

   About Sinopec Corp.

   Sinopec Corp. is the first Chinese company that has been listed in
Hong Kong, New York, London and Shanghai. The Company is an integrated
energy and chemical company with upstream, midstream and downstream
operations. The principal operations of Sinopec Corp. and its
subsidiaries include: exploring, developing, producing and trading
crude oil and natural gas; processing crude oil into refined oil
products; producing, trading, transporting, distributing and marketing
refined oil products; and producing and distributing chemical
products. Based on 2007 turnover, Sinopec Corp. is the largest listed
company in China. The Company is one of the largest crude oil and
petrochemical companies in China and Asia. It is also one of the
largest gasoline, diesel and jet fuel and other major chemical
products producers and distributors in China and Asia.

   For additional information about Sinopec Corp., please visit the
Company's website at www.sinopec.com

   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.

Sinopec Corp.
Investor Inquiries:
Tel: (8610) 64990060
Fax: (8610) 64990022
ir@sinopec.com
Media Inquiries:
Tel: (8610) 64990092
Fax: (8610) 64990093
media@sinopec.com

Copyright Business Wire 2008