Sinopec forecasts second-half fuel sales drop after surge in first half profit

BEIJING, Aug 26 (Reuters): China Petroleum & Chemical Corp, the country's largest refiner, said on Sunday that it expects fuel sales to drop and processing rates for crude to stay flat in the second half of 2018, amid an oversupply of refined fuels.

The company, known as Sinopec, will process 121 million tonnes of crude oil in the second half of the year, the same as in the first half, and its fuel sales will be 90.5 million tonnes, compared to 96.48 million in the first half, it said in a statement to the Shanghai Stock Exchange.

Net income for the company for the first half was 41.6 billion yuan ($6.05 billion), rising 53.6 per cent from a year ago, the statement said. That beat a company forecast of 50 per cent profit growth as the upstream and refining sectors delivered strong results.

Total revenue in the first six months of the year rose to 1.3 trillion yuan, up 11.5 per cent from a year earlier, amid higher crude prices, rising natural gas production and stronger fuel margins, the statement said.

The company does not give a breakdown for results for the second quarter but, based on Reuters calculations based on Sinopec's first quarter earnings, revenue in the second quarter was 679 billion yuan.

Net income in the second quarter rose to 22.8 billion yuan from 18.8 billion yuan in first quarter, the Reuters calculations showed, the highest since at least the start of 2013.

"Sinopec ramped up efforts to sell fuel in domestic market by giving a discount especially for diesel in the second quarter. The discounts have boosted sales volume but hurt revenue," Eyebright Securities said in a research note last week after the company gave a results forecast.

Crude oil production in the first half fell 1.6 per cent from the same period a year earlier to 143.6 million barrels while natural gas output was up 5.3 per cent from a year earlier to 476.2 billion cubic feet, Sinopec said.

Sinopec will produce 146 million barrels of crude oil in the second half of 2018, it said.

Refined product sales in the first half were down 2.1 per cent from the same period a year earlier.

Meanwhile, China's largest oil refiner Sinopec will produce 146 million barrels of crude oil in the second half of 2018, compared to 143.6 million barrels in the first half, the company said on Sunday.