Sinopec Corp. reported a 10.6% year-on-year decline in revenue and a 39.8% drop in net profit in the first half of the year, and the company has lowered its capital expenditure plan | Financial Report Insights

Under the environment of fluctuating international oil prices and accelerated energy substitution, Sinopec's revenue and profit both declined, but operating cash flow increased significantly by 44.4%. The oil and gas equivalent production reached 263 million barrels, a year-on-year increase of 2.0%, setting a historical high for the same period. The company has lowered its full-year capital expenditure plan by about 5%.

Despite facing challenges, Sinopec has set higher production targets for the second half of the year. The company plans to process 130 million tons of crude oil in the second half, up from 120 million tons in the first half. The sales target for refined oil products is set at 89.8 million tons, a decrease compared to 112 million tons in the first half.

On the 21st, Sinopec announced its semi-annual report for 2025:

• In the first half of 2025, Sinopec's operating revenue was 1.41 trillion yuan, a year-on-year decrease of 10.6%;
• The net profit attributable to shareholders was 21.483 billion yuan, a significant year-on-year decline of 39.8%.
• Operating cash flow was 61 billion yuan, a year-on-year increase of 44.4%.
• Earnings per share were 0.177 yuan, a year-on-year decrease of 40.2%.

Core business progress:

• Oil and gas equivalent production reached 263 million barrels, a year-on-year increase of 2.0%, setting a historical high for the same period
• Crude oil processing volume was 120 million tons, a year-on-year decrease of 5.3%
• Total sales volume of refined oil products was 112 million tons, a year-on-year decrease of 5.8%
• Ethylene production was 7.563 million tons, a year-on-year increase of 16.4%

Declining volume and price drag down performance, but the decline is controllable

Sinopec's mid-term revenue in 2025 is under significant pressure. The revenue of 1.41 trillion yuan represents a year-on-year decrease of 10.6%, mainly impacted by the dual blow of falling international oil prices and weak demand for refined oil products. The average price of Brent crude oil was $71.7 per barrel, a year-on-year decrease of 14.7%, while domestic refined oil consumption decreased by 3.6% year-on-year, with gasoline and diesel down by 4.6% and 4.3%, respectively.

The net profit attributable to shareholders was 21.5 billion yuan, a significant year-on-year decline of 39.8%, mainly due to:

• Inventory reduction impact: Continuous decline in oil prices led to inventory impairment
• Refining gross profit pressure: The price difference between gasoline and diesel narrowed, and gross profits of products like aviation kerosene and aromatics decreased
• Chemical capacity surplus: Continuous release of new capacity, leading to low industry gross profits

The significant improvement in operating cash flow is the biggest highlight of this period. The net cash inflow from operating activities was 61 billion yuan, a year-on-year increase of 44.4%, mainly benefiting from:

• Reduced net occupation of working capital such as inventory
• Improved efficiency in accounts receivable recovery
• Effective cost control measures

Upstream production hits new highs, downstream under pressure seeking breakthroughs

Exploration and development performance is outstanding. The oil and gas equivalent production reached 263 million barrels, setting a historical high for the same period, with natural gas production increasing by 5.1%. Significant breakthroughs were made in offshore oil and gas and ultra-deep shale gas in the Sichuan Basin, laying the foundation for future reserves and production increases. The profitability of the entire natural gas industry chain reached the best level in history for the same period, reflecting the company's achievements in the clean energy sector.

Refining and chemical business faces significant pressure. Affected by falling oil prices and weak demand, the refining segment's operating income was only 3.5 billion yuan, a year-on-year decrease of 50.4%. The chemical segment even reported a loss of 4.2 billion yuan, reflecting the severe reality of industry overcapacity.

Marketing transformation is accelerating. Despite the pressure on traditional oil product sales, the company is actively promoting the transformation into a comprehensive energy service provider of "oil, gas, hydrogen, and electricity." The operating volume of vehicle LNG and charging volume saw significant year-on-year growth, with LNG retail market share ranking first in the country, and non-oil business profits increased by 17.0% to 3.1 billion yuan.

Strategic focus is clear, investment rhythm optimized

Despite facing challenges, Sinopec has set higher production targets for the second half of the year. The company plans to process 130 million tons of crude oil in the second half, up from 120 million tons in the first half. The sales target for refined oil products is set at 89.8 million tons, a downward adjustment compared to 112 million tons in the first half.

Capital expenditure focuses on key areas. Of the 43.8 billion yuan in capital expenditure, 63% is allocated to exploration and development, mainly directed towards key oil and gas production capacity construction in Jiyang, Tahe, and other areas. At the same time, the company has reduced its full-year capital expenditure plan by about 5%, reflecting its flexibility in responding to market fluctuations.

Major projects are progressing steadily. The transformation and upgrading of Maoming Refinery and the construction of the 1.5 million-ton ethylene project in Zhenhai are progressing smoothly, laying the foundation for the company's transition to high-end chemical materials