China's Sinopec posts 36.8% drop in 2025 net profit on weak petrochemical margins, new energy substitution

Core Viewpoint - Sinopec reported a 36.8% decline in net profit for 2025, attributing this to weak petrochemical margins and increased competition from new energy sources [1]. Financial Performance - The company posted a net income attributable to shareholders of 31.8 billion yuan ($4.62 billion) based on Chinese accounting standards [2]. - Refinery throughput decreased by 0.8% to 250.33 million metric tons, equivalent to 5 million barrels per day, with expectations to remain stable at about 250 million tons in 2026 [2]. Production and Sales - Gasoline and diesel production fell by 2.4% and 9.1% to 62.61 million tons and 52.64 million tons, respectively, while kerosene production increased by 7.3% to 33.71 million tons [3]. - Gasoline sales decreased by 2.5% to 61.1 million tons, and diesel sales fell by 9.1% to 51.2 million tons, with average prices dropping by 7.7% and 8%, respectively [4]. - Domestic crude oil output reached 255.75 million barrels, up 0.7% year-on-year, while overseas output was 26.65 million barrels [4]. Future Projections - Sinopec expects domestic crude oil output to remain stable at 255.6 million barrels in 2026, while overseas output is projected to decline to 25.31 million barrels [5]. - Natural gas production rose by 4% to 1,456.6 billion cubic feet in 2025, with expectations to reach 1,471.7 billion cubic feet in 2026 [5]. - Ethylene production increased by 13.5% to 15.28 million tons in 2025 [5]. Revenue and Capital Expenditure - External sales revenue from chemical products totaled 378.0 billion yuan, down 9.6% year-on-year due to lower product prices [6]. - Capital spending was reported at 147.2 billion yuan in 2025, with 70.9 billion yuan allocated for exploration and development [6]. - For the current year, Sinopec plans capital spending between 131.6 billion to 148.6 billion yuan, focusing on crude oil capacity expansion and natural gas projects [7]. Market Performance - Sinopec's Hong Kong-listed shares have increased by 0.21% year-to-date, outperforming a 1.38% drop in the Hang Seng Index, but lagging behind peers PetroChina and CNOOC, which saw gains of 17.58% and 42.63%, respectively [8].