Sinopec’s profit plunges on oil price slide

Sinopec, Asia’s largest refiner, posted an 85 percent fall in first-quarter profit as a sharp decline in international crude prices hit upstream earnings and resulted in inventory writedowns at its massive refining arm. The state-controlled company’s net profit was $350.06 million.

Sinopec last month said that it might only break even in the first quarter, citing margins hit by higher-cost crude purchased earlier.

It issued the profit warning after reporting a worse than expected fourth-quarter net loss of 5.3 billion yuan, its first quarterly loss since becoming a public company in 2000.

Domestic rival PetroChina reported a sharper than expected 82 percent fall in first-quarter profit.

Sinopec’s exploration and production business moved into the red in the first quarter, posting an operating loss of 1.23 billion yuan versus a profit of 13.2 billion yuan a year earlier.

Its refining division, which processed 58.6 million tonnes of crude in the first quarter, incurred a loss of 3.36 billion yuan, against a profit of 3.74 billion yuan a year ago. It attributed the losses to write-down of high cost crude oil inventories.

Its marketing and distribution business reported an operating profit of 5.3 billion yuan, down from 8.83 billion in the first quarter of last year.

Sinopec in September 2014 unveiled a plan to sell a $17.5 billion stake in the business, which include a wholesale business, more than 30,000 petrol stations, over 23,000 convenience stores, as well as oil-product pipelines and storage facilities.