China Petrochemical's annual net profit declines for four consecutive years

Sinopec (600028.SH/00386.HK) reported another decline in net profit last year.

On March 22, Sinopec released its annual performance report, with revenue reaching 2.78 trillion yuan, down 9.5% year-on-year; net profit attributable to shareholders was 31.809 billion yuan, down 36.8% year-on-year. This marks the fourth consecutive year of profit decline since 2022.

The company attributed last year’s revenue decline to falling prices of oil and petrochemical products, as well as decreased sales of refined oil products.

Last year, the average spot price of Brent crude oil was $69.1 per barrel, a 14.5% decrease compared to the previous year.

The company’s cash flow remained resilient. As of the end of December last year, net cash flow from operating activities was 162.496 billion yuan, an 8% increase year-on-year. However, its debt-to-asset ratio increased by 0.88 percentage points to 54.17%.

Despite poor performance, Sinopec still paid dividends, distributing a total cash dividend of 0.2 yuan per share (tax included), with a planned total dividend payout of about 13.5 billion yuan. During the 14th Five-Year Plan period, Sinopec’s cumulative dividends reached 208.5 billion yuan, with the annual average compound return for A-shares and H-shares shareholders at 16.1% and 15.9%, respectively.

Looking at segments, Sinopec’s refining division saw increased operating income, while exploration and development, as well as marketing and distribution divisions, experienced declines. The chemical division continued to incur losses, with operating losses expanding.

By 2025, Sinopec’s exploration and development division is expected to have an operating income of 45.531 billion yuan, a 19.2% decrease year-on-year.

Last year, the company’s oil and gas production was approximately 525 million barrels of oil equivalent, up 1.9% year-on-year; natural gas production was about 41.252 billion cubic meters, up 4%.

During the same period, the average realized sales price of crude oil was 3,279 yuan per ton, down 13% year-on-year; the average realized sales price of natural gas was 2,112 yuan per thousand cubic meters, down 6.5%.

Last year, Sinopec’s refining division achieved an operating income of 9.448 billion yuan, a 40.7% increase.

It processed about 250 million tons of crude oil and produced 149 million tons of refined products. Jet fuel production increased by 7.3% to 33.71 million tons.

Among the three major refining products, all prices declined on average. Gasoline, diesel, and kerosene sold at 7,764 yuan/ton, 6,189 yuan/ton, and 4,957 yuan/ton, respectively, decreasing by 7.7%, 8%, and 9.9%.

The company’s marketing and distribution division reported an operating income of 9.97 billion yuan, down 46.5% year-on-year.

Crude oil sales fell by 8.4% to 7.078 million tons, and total refined oil sales were 229 million tons, down 4.3%.

By 2025, the company stated that domestic demand for refined oil decreased by 4.1% last year. Gasoline demand fell by 4.5%, diesel by 5.6%, while kerosene increased by 4.4%.

The chemical division remains the company’s biggest “loss point,” with operating losses expanding to 14.578 billion yuan.

The company said that increased consumption could not offset the added supply pressure, leading to a continuous decline in overall chemical gross profit.

Facing long-term overcapacity in refining and peak demand for fuel, Sinopec is also implementing strategic adjustments, aiming to become a comprehensive energy service provider of “oil, gas, hydrogen, electricity, and services,” to build a second growth curve.

In its annual report, Sinopec disclosed that hydrogen refueling maintains the largest domestic share, with over 13,000 charging and swapping stations built. By 2025, the charging operation platform’s total charging volume is expected to exceed 5 billion kWh, nearly doubling compared to previous years.

In early January, Sinopec Group officially announced the restructuring with China National Aviation Fuel Group (CNAF).

This restructuring is also a strategic move for Sinopec to address its development challenges and adapt to industry trends. Amid declining demand for gasoline and diesel, jet fuel has become the only growth driver in China’s future refined oil consumption structure. Through the restructuring of CNAF, Sinopec has integrated upstream and downstream industry chains and secured future growth opportunities from the recovery of air travel.

Looking ahead to 2026, Sinopec plans to spend between 131.6 billion and 148.6 billion yuan in capital expenditures. In 2025, capital expenditure was 147.2 billion yuan.

In terms of production and operations, Sinopec plans to produce 281 million barrels of crude oil, about 41.68 billion cubic meters of natural gas, process 250 million tons of crude oil, and produce 148 million tons of refined products annually.