China’s Sinopec 2022 net profit falls 8.1% on weak demand, high cost

SINGAPORE (ICIS)–China’s biggest refiner Sinopec posted an 8.1% decrease in 2022 net profit as tepid demand and strong crude squeezed its margins.

In million yuan (CNY)	2022	2021	% change
Income	3,318,168	2,740,884	21.1%
Operating expenses	-3,242,333	-2,646,256	22.5%
Operating profit	75,835	94,628	-19.9%
Profit attributable to shareholders	66,153	71,975	-8.1%

KEY POINTS
– Domestic demand in China for natural gas, petrochemicals and fuel weakened in 2022, partly of global economic weakness, Sinopec said on Sunday.
– Chemical margins slumped amid soft demand and increased feedstock prices. The chemical segment reported an operating loss of CNY14.1bn, reversing the CNY11.1bn profit generated in 2021.
– Refining margin declined by 64.7% to CNY344/tonne, mainly due to lower domestic gasoline and diesel processing margins because of high crude prices and freight cost.

OUTLOOK
– Sinopec expects demand to improve this year as the Chinese economy recovers.
– Its 2023 crude output is expected to slip, but gas, fuel and ethylene output will all post increases.
– Sinopec’s planned capital expenditure (capex) for 2023 will be CNY165.8bn, down 12.3% from 2022.

Output	2023 target	2022	Change
Crude (million barrels)	280.23	280.86	-0.2%
Natural gas production (billion cubic feet)	1291.8	1248.75	3.4%
Refinery throughput (million tonnes)	250	242.27	3.2%
Gasoline, diesel and kerosene (million tonnes)	146	140.15	4.2%
Ethylene (million tonnes)	14	13.44	4.2%