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Sinopec Shanghai Petrochemical suffers loss in H1

(Agencies)
Updated: 2008-08-28 16:06

Sinopec Shanghai Petrochemical Co Ltd said it booked a net loss of 372.77 million yuan ($54.56 million) in the first half under Chinese accounting standards, against a profit of 1.76 billion yuan a year earlier, due to high crude oil prices and government caps on refined oil product prices.

Due to continued demand growth, limited output growth, depreciation of the dollar and speculative trading, the price of crude oil, the company's major raw material, has been above $100 since February, peaking at about $140.

In the first half, the average price of Brent crude was about $111, up 73 percent year-on-year, the company said in its interim report filed with the Shanghai Stock Exchange.

The company processed 5.0665 million tons of crude oil in the six months, up 12.27 percent year-on-year, including 4.8933 million tons of imported oil and 173,200 tons of offshore oil.

Output of gasoline and diesel amounted to 417,300 tons and 1.89 million tons respectively, up 43.50 percent and 38.93 percent year-on-year, while the output of jet fuel was 336,900 tons, down 4.15 percent.

The company produced 480,900 tons of ethylene and 265,000 tons of propylene in the first half, up 0.92 percent and 6.85 percent respectively, while output of synthetic resins and plastics fell 3.99 percent to 536,100 tons.

Net sales from petroleum products, intermediate petrochemicals and resins and plastics increased by 43.88 percent, 44.30 percent and 5.51 percent year-on-year respectively after average selling prices for the three products rose 16.67 percent, 20.4 percent and 9.23 percent.

Operating revenue in the six months rose 22.41 percent year-on-year to 32.91 billion yuan, while operating costs were up 40.65 percent at 33.3 billion yuan.

The company's weighted average cost of crude oil was 5,068.88 yuan per ton in the first half, up 42.88 percent year-on-year, while the total cost of processing crude oil stood at 25.68 billion yuan, up 60.5 percent.

Capital expenditure in the first six months was 416 million yuan, the company said.

During the period, the company received a total of 1.6277 billion yuan in government subsidies as compensation for losses incurred due to the caps on domestic prices and measures taken to stabilize the supply of petroleum products.

The central government started to provide subsidies to its largest shareholder China Petroleum & Chemical Corp (Sinopec) for losses suffered from processing imported crude oil from April 1, as well as value-added tax refunds.

Compared with its parent company Sinopec, Sinopec Shanghai does not have upstream oil and gas operations, and as a result, it is more sensitive to rising crude oil prices.

"The National Development and Reform Commission raised the prices of refined oil products on June 20, but it still can not cover the company's refinery losses," it said.

The loss per share was 0.052 yuan, against earnings per share of 0.244 yuan a year earlier.

Under international accounting standards, the company booked operating revenue of 32.87 billion yuan, up from 26.82 billion a year earlier, with a net loss of 358.08 million, compared to a net profit of 1.79 billion a year earlier.

The company said downstream petrochemical prices declined in line with a recent dip in international crude oil prices, and it has yet to fully dispose of expensive crude oil in transit or in stock.

"It remains to be seen whether China's subsidy policy will change or continue," it said, adding that there is little reason to be optimistic about the operating environment, possibly leading to a bigger loss in the first nine months of the year.