China Petroleum & Chemical Corporation Recorded a Surge in Operating Results During the First Half of 2013, Net Profit Increased by 24% Year-on-Year

BEIJING, Aug. 25,2013 /PRNewswire/ -- China Petroleum & Chemical Corporation ("Sinopec" or "the Company") (HKEX:386; CH:600028; NYSE: SNP) today announced its interim results for the six months ended 30 June 2013.

Financial Highlights:

• In accordance with International Financial Reporting Standards ("IFRS"), the Company's turnover, other operating revenues and other income was RMB1,415.244 billion, up 5.0% year-on-year. Operating profit was RMB46.741 billion, an increase of 16.6% year-on-year. Net profit attributable to owners of the Company was RMB30.281 billion, a 23.6% increase year-on-year. Earnings per share was RMB0.262, up 20.7% over the same period last year.
• In accordance with the PRC Accounting Standards for Business Enterprises ("ASBE"), the Company's operating income was RMB1,415.244 billion, up 5.0% year-on-year. Operating profit was RMB43.693 billion, an increase of 30.4%. Net profit attributable to equity shareholders of the Company was RMB29.417 billion, a 24.1% increase year-on-year. Earnings per share was RMB0.254, an increase of 21.0% year-on-year.
• The Board of Directors approved an interim dividend of RMB0.09 per share, representing a 20.9% increase in cash dividend over the same period last year.

In the first half of 2013, global economic recovery remained weak, while China's economy grew steadily with 7.6% GDP growth over the same period last year. Domestic demand for oil products and chemical products continued to grow. Prices of chemical products dropped due to an increase in imported products. The Chinese government further improved the pricing mechanism for oil products and announced an adjustment to the price of natural gas.

BUSINESS REVIEW

Exploration and Production Business

In the first half of 2013, international oil prices hit an early high and then eased, fluctuating at a high range for the period. Brent spot price for crude oil averaged USD107.50 per barrel, down by 5.15% compared with the corresponding period in 2012. Domestic oil prices moved in line with the international market.

The Company achieved excellent results in oil and gas exploration through domestic growth in five key areas, which include Tarim Basin, the western rims of the Junngar Basin, the Ordos Basin, the Sichuan Basin and the Xihu depression. In exploration, the Company made major breakthroughs in new blocks such as the Tarim Basin, and discoveries in new locations, strata and types. The Company also made progress in exploration evaluation in key areas. In oil and gas development, the Company maintained a highly efficient level of production, achieving domestic production of 153.66 million barrels of crude oil, up by 1.1% compared with the corresponding period in 2012, and 324.14 billion cubic feet of natural gas, up by 11.8% compared with the corresponding period in 2012. The Company also made major progress in the Fuling shale gas project and launched development of coal-bed methane in South Yanchuan. In the first half of 2013, the overseas equity oil production of the Company reached 11.78 million barrels, an increase of 5.8% compared with the corresponding period in 2012.

In the first half of 2013, the operating revenues of this segment were RMB117.2 billion, representing a decrease of 7.0 % over the same period in 2012. The Exploration and Production Segment operates fairly smoothly. However, due to the fall in oil prices, the segment realised RMB30.9 billion of operating profit in the first half of 2013, down by 23.5% on a year-on-year basis.

Summary of Operations for the Exploration and Production Segment

	Six-month period ended 30 June		Changes
	2013	2012	%
Oil and gas production (mmboe)	219.46	211.42	3.80
Crude oil production (mmbbls)1	165.44	163.09	1.44
China	153.66	151.96	1.12
Overseas	11.78	11.13	5.84
Natural gas production (bcf)2	324.14	289.93	11.8
1: For domestic production of crude oil, 1 tonne = 7.1 barrels; for overseas production, 1 tonne = 7.27 barrels.
2: For production of natural gas, 1 cubic meter = 35.31 cubic feet.

Refining Business

In the first half of 2013, the Company adjusted its product mix in response to changes in domestic market demand, producing more gasoline, jet fuel and other high-value-added products that sold well in the market and increasing the export volume of its products. Sinopec upgraded fuel quality and considerably increased the production of gasoline and diesel above GB IV standards. The Company optimised the marketing of LPG, asphalt and paraffin by taking advantage of its strengths in specialisation.

In the first half of 2013, refinery throughput was 115 million tonnes, representing a growth of 5.17% over the same period last year. Oil product output was 69.75 million tonnes, rose by 5.76% compared with the corresponding period in 2012. The growth of gasoline and kerosene production was 16.01% and 15.31% respectively.

In the first half of 2013, the operating revenues of this segment totaled RMB644.2 billion, representing an increase of 0.9% over the same period of 2012. This was mainly attributable to the increased sales volume. In the first half of 2013, the improved domestic refined oil product pricing mechanism was in effect. The refining margin of the Company was RMB209.5 per tonne, a significant increase over the same period in 2012. The segment turned into profit, with an operating profit of RMB0.2 billion in the first half of 2013.

Summary of Operations for the Refining Segment

Unit: million tonnes
	Six-month period ended 30 June		Changes
	2013	2012	(%)
Refinery throughput	115.44	109.76	5.17
Gasoline, diesel and kerosene production	69.75	65.95	5.76
Gasoline	22.75	19.61	16.01
Diesel	38.64	39.10	(1.18)
Kerosene	8.36	7.25	15.31
Light chemical feedstock production	18.82	18.53	1.57
Light yield (%)	76.20	77.20	(1.0) percentage points
Refining yield (%)	94.61	95.41	(0.8) percentage points
Note: Refinery throughput is converted at 1 tonne = 7.35 barrels; Includes 100% of production of joint ventures.

Marketing and Distribution Business

In the first half of 2013, in response to changes in supply and demand in the domestic market and the implementation of the newly-announced oil products pricing mechanism, the Company adjusted its marketing strategies by adopting differentiated marketing, thus maximising its profitability. While increasing sales volume, Sinopec focused on the retail market and expanded its size by offering distinctive services. The Company strengthened its quality management to ensure excellent oil products quality. The Company also vigorously promoted growth in new businesses and in its non-fuel businesses, with the aim of providing one-stop service to its customers. In the first half of 2013, total sales volume of oil products increased to 88.05 million tonnes, up by 6.51% over the same period last year. Total domestic sales volume reached 80.75 million tonnes, an increase of 4.83%, and sales of non-fuel businesses reached RMB6.58 billion, an increase of 20.5% compared with the corresponding period in 2012.

In the first half of 2013, the operating revenue of this segment was RMB732.8 billion, an increase of 3.2% over the same period in 2012, which was mainly attributed to the increased oil products sales volume. In the first half of 2013, the sales revenue of gasoline totaled RMB246.8 billion, representing an increase of 10.5% over the same period in 2012; and the sales revenue of diesel and kerosene totaled RMB344.7 billion and RMB60.6 billion, a decrease of 2.3% and an increase of 3.9% respectively over the same period in 2012. In the first half of 2013, the segment's operating profit was RMB16.9 billion, representing a decrease of 16.8% over the same period in 2012.

Summary of Operations for Marketing and Distribution Segment

Unit: million tonnes
	Six-month period ended 30 June		Changes
	2013	2012	%
Total sales volume of oil products	88.05	82.67	6.51
Total domestic sales volume of oil products	80.75	77.03	4.83
Retail	55.52	53.15	4.46
Direct sales	16.07	15.68	2.49
Wholesale	9.16	8.20	11.71
Annualised average throughput per station (tonne/station)	3,620	3,487	3.81
	As of 30 June 2013	As of 31 December 2012	Change from the end of last year (%)
Total number of Sinopec-branded service stations	30,682	30,836	(0.50)
Company-operated	30,669	30,823	(0.50)

Chemicals Business

In the first half of the year, the Company further optimised its feedstock structure and cut feedstock costs by using more light feedstock. The Company sharpened its market analysis; strengthened the integration of R&D, production and marketing; optimised operations and utilisation of facilities; and introduced new products to improve its product mix. The Company improved its marketing tactics and customer service. The Company reinforced its supply-chain management and operated with low inventory level. Ethylene production was 4.84 million tonnes, an increase of 0.64% compared with the corresponding period in 2012. Chemicals sales volume reached 28.06 million tonnes, up by 7.30% compared with the corresponding period in 2012.

In the first half of 2013, operating revenue of the chemicals segment was RMB211.5 billion, representing an increase of 5.4% over the same period in 2012, which was mainly due to the increase in the sales volume of chemical products. In the first half of 2013, the segment suffered an operating loss of RMB0.4 billion, a decrease in losses of RMB0.8 billion.

Summary of Operations, Chemicals Segment

Unit: thousand tonnes
	Six-month period ended 30 June		Changes
	2013	2012	(%)
Ethylene	4,841	4,810	0.64
Synthetic resin	6,730	6,701	0.43
Synthetic fiber monomer and polymer	4,539	4,580	(0.90)
Synthetic fiber	699	674	3.71
Synthetic rubber	457	475	(3.79)
Note: Includes 100% of production of joint ventures.

Health, Safety and the Environment and Low-Carbon Growth

The Company strictly implemented an HSE accountability system, promoted OSHA management standards, enhanced operation hazard prevention and maintained safety in production. The Company increased its emphasis on environmental protection, energy conservation and emission reduction as well as on green and low-carbon growth. The Company established a dedicated department in the head office to coordinate planning and management of these activities, to promote energy performance contracting and the development of an energy management system. The Company also launched the Blue Skies, Clean Water initiative. In the first half of 2013, the Company's energy intensity dropped by 3.24% compared with the corresponding period in 2012. Chemical Oxygen Demand (COD) in discharged wastewater fell by 4.15% compared with the corresponding period in 2012, and SO2 emissions fell by 4.54% as compared with the corresponding period in 2012.

Capital Expenditures

The Company has focused on improving the quality and efficiency of development and has made progress in a number of key projects. The Company's capital expenditures were RMB51.975 billion in the first half of 2013. Capital expenditures for E&P were RMB24.996 billion, mainly for tight oil in south Hubei, shallow heavy oil in west Shengli, new blocks in the Tahe Oilfield, Yuanba and the Daniudi gas fields, and the Shandong LNG project. Capital expenditures for the Refining Segment were RMB7.710 billion, mainly for upgrading oil product quality and the revamping project for processing lower-quality crude oil. In the Chemicals segment, RMB5.283 billion were used for the construction of the Wuhan 800,000-tpa ethylene project, the Hubei syngas-to-MEG project and the Hainan aromatics project. Capital expenditures for the Marketing and Distribution segment were RMB11.612 billion, mainly for building and acquiring service stations along expressways and in major cities and for the construction of refined oil product pipelines and depots. The Company added 501 new service stations during the period, of which 100 were gas stations. RMB2.374 billion was used for the Corporate and Others, mainly for R&D facilities and IT projects construction.

Mr. Fu Chengyu, Chairman of Sinopec said: "We saw a challenging and complex global economy and energy market in the first half of 2013. In response to market changes, Sinopec worked hard to expand sales, adjust raw material and feed stock mix, as well as product mix to achieve the resulting good performance. Sinopec has been focusing on shareholder returns and long term value for investors; our interim cash dividend announced represented a 20.9% increase over the same period last year. As we develop the business, we will continue to improve on quality and profitability, leveraging the strengths of our integrated business model. We will strengthen our green and low-carbon strategy and undertake corporate social responsibility so to achieve sustainable growth."

BUSINESS PROSPECTS

In the second half of the year, the global economic recovery will continue to be weak. The Chinese government will accelerate structural adjustments and upgrades to maintain stable economic growth. In the second half of the year, the Company expect balanced supply and demand fundamentals in the global oil market and a steady growth in domestic demand for refined oil products and chemicals. Given current circumstances, the Company will focus on improving the quality and efficiency of development, always oriented toward the market and centered on profitability, while ensuring safety and protection of the environment. The Company will redouble its efforts to expand its markets, optimise operations, unlock its potential, increase its efficiency, improve the capacity of sustainable development, reinforce safe production practices and achieve sound operating results.

In exploration and production, Sinopec will focus its exploration efforts on commercial discoveries in key areas. In development, the Company will strengthen development of mature oilfields, develop tight-oil resources effectively and accelerate development in other key areas. The Company will increase its activities in geological surveys and evaluation of potential areas for development to achieve capacity replacement. In natural gas, the Company will accelerate development in Yuanba, the medium and shallow formations of west Sichuan and the Daniudi gas field. In unconventional resources, the Company will conduct further evaluations of marine-facies shale gas resources in the Sichuan basin and the surrounding areas. The Company will also increase the pace of activity in the Fuling marine-facies shale gas zone and launch the pilot development program on stream, along with the coal-bed methane project in South Yanchuan. In the second half of the year, the Company expect to produce 23.29 million tonnes of crude oil and 9.2 billion cubic meters of natural gas.

In refining, with efficiency as Sinopec's top priority, the Company will optimise crude procurement and allocation and reduce crude purchasing costs. The Company will promote oil products upgrading, and supply the market with clean fuels. The Company will also reinforce coordination between production and marketing, adjust its product mix and utilisation rate, increase domestic output of gasoline, jet fuel and other products with high value add, and expand export volume. In the second half of the year, the Company plan to process 120 million tonnes of crude oil.

In marketing and distribution, the Company will continue to be market based, strengthen resource planning, expand retail and direct sales volume, and enhance operational quality and efficiency. The Company will promote one-stop service for its customers, develop new product features and accelerate development of its non-fuel businesses. In the second half of the year, the Company plan to sell 84.25 million tonnes of oil products in the domestic market.

In chemicals, the Company will continue to adjust facility utilisation and production plans based on demand, modify the Company's product mix through better integration of production, marketing and R&D, optimise the structure of its feedstock to achieve lower costs, maintain operations with low inventory level, implement differentiated marketing, develop new and specialty products, and increase production of high-value-added products. In the second half of the year, the Company plan to produce 5.05 million tonnes of ethylene.

APPENDIX

FINANCIAL DATA AND INDICATORS PREPARED IN ACCORDANCE WITH CHINA ACCOUNTING STANDARDS FOR BUSINESS ENTERPRISES ("ASBE")
	Six-month periods ended 30 June		Changes overthesame period of the preceding year
	2013	2012
Items	RMBmillion	RMB million	(%)
Operating income	1,415,244	1,348,072	5.0
Net profit attributable to equity shareholders of the Company	29,417	23,697	24.1
Net profit attributable to equity shareholders of the Company -ƒafter deducting extraordinary gain/loss items	29,196	23,259	25.5
Net cash flows from operating activities	32,903	20,554	60.1
	At 30 June 2013	At 31 December 2012	Changes from the end of last year
	RMB million	RMB million	(%)
Total equity attributable to equity shareholders of the Company	546,386	513,374	6.4
Total assets	1,274,233	1,238,522	2.9
	Six-month periods ended 30 June		Changes over the same period of the preceding year
	2013	2012
ItemsNote	RMB million	RMB million	(%)
Basic earnings per share (RMB)	0.254	0.210	21.0
Diluted earnings per share (RMB)	0.239	0.202	18.3
Basic earnings per share after deducting extraordinary -ƒgain/loss items (RMB)	0.252	0.206	22.3
Weighted average return on net assets (%)	5.49	4.89	0.6 percentage points
Weighted average return on net assets after deducting -ƒextraordinary gain/loss items (%)	5.45	4.80	0.65 percentage points
Net assets per share attributable to equity shareholders -ƒof the Company (RMB) (fully diluted)	4.687	4.548	3.1
Note: Total share capital of Sinopec Corp. for the six-month period ended 30 June 2013 has increased as a result of H share issuances, bonus issues of shares and conversion of capital reserves to all shareholders and conversion of the A share Convertible Bonds. The data of 2012 have been retrospectively adjusted in accordance with ASBE.

FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRS")
			Changes over the same period of the preceding year(%)
	Six-month periods ended 30 June
	2013	2012
Items	RMB million	RMB million
Operating profit	46,741	40,083	16.6
Net profit attributable to owners of the Company	30,281	24,503	23.6
Net cash generated from operating activities	32,903	20,322	61.9
			Changes from the end of last year (%)
	Asof30June	As of 31 December
	2013	2012
	RMB million	RMB million
Equity attributable to owners of the Company	543,717	510,914	6.4
Total assets	1,273,688	1,257,944	1.3
			Changes over the same period of the preceding year (%)
	Six-month periods ended 30 June
	2013	2012
Items1	RMB million	RMB million
Basic earnings per share (RMB)	0.262	0.217	20.7
Diluted earnings per share (RMB)	0.246	0.209	17.7
Net assets per share (RMB)	4.664	4.527	3.0
Return on capital employed (%) 2	3.88	3.65	0.23 percentage points
Note 1: Total share capital of Sinopec Corp. as of 30 June 2013 has increased as a result of issuance of H share, bonus issues of shares and capitalisation of share premium to all shareholders and conversion of the A share Convertible Bonds during the first half of 2013. The data of 2012 have been retrospectively adjusted in accordance with IFRS.
Note 2: Return on capital employed=operating profit×(1-income tax rate)/capital employed

THE FOLLOWING TABLE SETS FORTH THE OPERATING REVENUES, OPERATING EXPENSES AND OPERATING PROFIT/(LOSS) BY EACH SEGMENT BEFORE ELIMINATION OF THE INTER-SEGMENT TRANSACTIONS FOR THE PERIODS INDICATED, AND THE CHANGES BETWEEN THE FIRST HALF OF 2013 AND THE FIRST HALF OF 2012.
		Six-month periods ended 30 June
		2013	2012	Change
		RMB million	RMB million	(%)
Exploration on and Production Segment
	Operating revenues	117,242	126,117	(7.0)
	Operating expenses	86,293	85,654	0.7
	Operating profit	30,949	40,463	(23.5)
Refining Segment
	Operating revenues	644,246	638,573	0.9
	Operating expenses	644,033	657,074	(2.0)
	Operating profit/(loss)	213	(18,501)	-
Marketing and Distribution Segment
	Operating revenues	732,752	709,953	3.2
	Operating expenses	715,900	689,701	3.8
	Operating profit	16,852	20,252	(16.8)
Chemicals Segment
	Operating revenues	211,521	200,769	5.4
	Operating expenses	211,930	202,020	4.9
	Operating loss	(409)	(1,251)	-
Corporate and others
	Operating revenues	681,911	654,279	4.2
	Operating expenses	682,925	654,635	4.3
	Operating loss	(1,014)	(356)	-
Elimination of inter-segment profit		150	(524)	-

About Sinopec

Sinopec is one of the largest integrated energy and chemical companies with upstream, midstream and downstream operations in China. Its principal operations include: the exploration and production, pipeline transportation and sales of petroleum and natural gas; the sales, storage and transportation of petroleum products, petrochemical products, synthetic fiber, fertilizer and other chemical products; import & export, as well as import and export agency business of oil, natural gas, petroleum products, petrochemical and chemical products, and other commodities and technologies; and research, development and application of technologies and information.

Adhering to its corporate mission of "Enterprise development, Contribution to the Country, Shareholder value creation, Social responsibility and Employee wellbeing", Sinopec implements strategies of resources, markets, integration, internationalization, differentiation and green low-carbon development with a view to realize its vision of building a world first class energy and chemical company.

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.

Investor Inquiries:		Media Inquiries:
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Tel:	(8610) 5996 0028	Tel:	(8610) 5996 0028
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Hong Kong
Tel:	(852) 2824 2638	Tel:	(852) 3512 5000
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SOURCE China Petroleum & Chemical Corporation