Sinopec Achieved 10-year Record High Performance Focus on Shareholder Returns with H-share Annualized Dividend Yield of 14.3%

BEIJING, CHINA / ACCESSWIRE / March 27, 2022 / China Petroleum & Chemical Corporation ("Sinopec Corp." or the "Company") (HKEX:386)(SSE:600028)(NYSE:SNP) today announced its annual results for the twelve months ended 31 December 2021.

Financial Highlights

• In accordance with IFRS, the Company's revenue reached RMB 2.74 trillion, increased by 30.2% year-on-year; Profit attributable to shareholders of the Company was RMB 71.975 billion, surged by 115.2% year-on-year. Basic earnings per share were RMB 0.594. In accordance with ASBE, the Company's profit attributable to shareholders of the Company was RMB 71.208 billion, increased by 114.0% year-on-year. Basic earnings per share were RMB 0.588.
• In accordance with IFRS, cash flow from operating activities totaled RMB 225.174 billion with a year-on-year increase of 33.6%, reached a historical high. The Company's liability-to-asset ratio as at the end of 2021 was 51.56%, representing a solid financial position.
• Focus on shareholder returns. Taking into account the Company's profitability, shareholder returns and the future development, the Board of Directors proposed a final dividend of RMB 0.31 per share. Combined with the interim dividend of RMB 0.16 per share, the total dividend for the year is RMB 0.47 per share. Dividend payout ratio was approximately 80%. Meanwhile, the Board of Directors proposed the general mandate of shares buyback to enrich the Company's value management initiatives.
• Achieved high-quality operating results across all core businesses. Domestic oil and gas reserve replacement ratio reached 154% and natural gas production grew by 11.9% year-on-year; Processed 255 million tonnes of crude oil, up by 7.8%; Total domestic sales volume of refined oil products amounted to 171 million tonnes, up by 2.0% year-on-year; Annual ethylene output was 13.38 million tonnes, representing a year-on-year increase of 10.9%.

Business Highlights

In 2021, the COVID-19 outbreak pandemic continued, and the world economic recovery was weak. China achieved remarkable results in pandemic prevention and control, and its economy continued to grow. The annual gross domestic product (GDP) increased by 8.1% year-on-year. International oil prices fluctuated with upward trend, the domestic demand for refined oil products recovered, the demand for natural gas increased rapidly, and the demand for chemical products remained stable. Following market conditions, the Company optimized the whole business chain, expanded market, increased sales volume, and significantly improved the profits of our core businesses. The net profit attributable to the shareholders of the company reached the best level in nearly a decade.

• Exploration and Production segment: promote oil and gas exploration and development in major target basins, continuously scaled up profitable capacity, and made new breakthroughs in increasing reserves, maintaining oil production, increasing gas output, and improving efficiency. In exploration, we strengthened risk exploration and trap pre-exploration in new areas, and made major breakthroughs in continental facies shale oil exploration in Bohai Bay Basin, North Jiangsu Basin and Sichuan Basin. In natural gas development, we sped up capacity building of Weirong, Yongchuan South and Nanchuan fields, strengthened fine development of Puguang, Yuanba and other fields, and deepened the development of Fuling shale gas field. We developed new natural gas market reaching more quality end users with sales volume and market share rising constantly. The domestic oil and gas reserve replacement rate reached 154%, while natural gas production grew by11.9% over the previous year, thereby increasing reserves, stabilizing oil production, increasing gas output, and improving efficiency.
• Refining segment: insisted on integration and optimisation of production and marketing, focused on expanding scale and adjusting structure, and maximized the overall profits along the value chain. Throughput and major products have seen significant growth as a result of the Company's ongoing structural adjustment, including initiatives to shift from oil products to chemical feedstock and refining specialties, as well as efforts to construct world-class refining and chemical production center. Six hydrogen purification units and filling facilities were built throughout the year. In 2021, the Company processed 255 million tonnes of crude oil, up by 7.8%, yielding 146 million tonnes of refined oil products, with a year-on-year increase of 3.3%. Among them, gasoline output was 65.21 million tonnes, increased by 12.6%, and light chemical feedstock was 45.41 million tonnes, up by 12.9%.
• Marketing and Distribution segment: enhanced integration and coordination of production and sales, increased market share and achieved steady growth of domestic sales of refined oil products, accelerated the development of non-fuel businesses, and established a new model of comprehensive energy supply and services, providing refined oil products, natural gas, hydrogen, EV charging & battery swapping, and non-fuel businesses. Total annual sales volume of refined oil products was 221 million tonnes, of which total domestic sales volume amounted to 171 million tonnes, up by 2.0% year-on-year.
• Chemicals segment: adhered to "basic plus high-end", accelerated the construction of advanced production capacity, strengthened structural adjustment, extended the industrial chain and cultivated growth points. We further integrated process of production, marketing, research and application, strengthened R&D efforts for high-end products and new materials, and increased output of high value-added products. The annual ethylene output was 13.38 million tonnes, representing a year-on-year increase of 10.9%. At the same time, we vigorously developed strategic customers and continuously improved the service level. The total operating volume of chemical products in 2021 was 81.6 million tonnes, realizing full production and sales.

Mr. Ma Yongsheng, Chairman of Sinopec Corp. said, "In 2021, confronted with the impacts of the Covid-19 pandemic as well as the complex and challenging macroeconomic environment, the Company has taken full advantage of its integrated businesses mode, made every effort to optimize operations, and expanded sales and markets. Operating results for 2021 achieved a 10-year record high. Meanwhile, the Company strengthened ESG measures and disclosures, corporate governance has continued to evolve. We vigorously implemented an innovation-driven strategy with research and development initiatives achieved fruitful results. We have steadily improved the quality of our development through accelerated transition initiatives. As a Lead member of the United Nations Global Compact, the Company effectively fulfilled its corporate social responsibilities. Looking ahead, the Company will focus on promoting corporate governance, focus on implementing an innovation-driven strategy, focus on improving energy supply capacity, focus on enhancing the quality and upgrading of the petrochemical industry, and focus on boosting green and low-carbon competitiveness. In 2022, the Company will continue to adhere to the principle of pursuing progress while maintaining stability. In complete, accurate and comprehensive implementation of China's new development philosophy, the Company will integrate the new development philosophy with its existing businesses by high quality to further enhance its corporate governance, production and operations, transformation and development, technology innovation, management reform, and risk control. In its upstream businesses, the Company will make greater efforts to increase reserves with higher efficiency, upgrade production in an economical way, and reduce costs and fees, while expanding its resource channels and improving its energy supply capacity. In refining, the Company will strive to adjust its structure to reduce costs and improve supply capacity. In the marketing and distribution segment, it will further take advantage of its marketing network to provide customers with comprehensive, high-quality services. In the chemicals, the Company will accelerate advanced capacity construction to extend its high-end industrial chain and develop new growth engines. At the same time, the Company will actively and steadily deploy new energy businesses such as hydrogen energy and photovoltaic stations to strengthen its green and low-carbon competitiveness, making every effort to achieve its goal of becoming a world leading company and create greater value for our shareholders and society at large."

Business Review

Exploration and Production

In 2021, the Company seized the opportunity of rising oil prices to promote oil and gas exploration and development in major target basins, continuously scaled up profitable capacity, and made new breakthroughs in increasing reserves, maintaining oil production, increasing gas output, and improving efficiency. In exploration, we strengthened risk exploration and trap pre-exploration in new areas, and made a number of new oil and gas discoveries, including major breakthroughs in continental facies shale oil exploration in Bohai Bay Basin, North Jiangsu Basin and Sichuan Basin. In crude oil development, we accelerated building of production capacity in Shunbei and Tahe, and strengthened fine development in mature fields. In natural gas development, we sped up capacity building of Weirong, Yongchuan South and Nanchuan fields, strengthened fine development of Puguang, Yuanba and other fields, and deepened the development of Fuling shale gas field. In the meantime, we signed medium and long-term LNG agreements to increase overseas natural gas supply. We developed new natural gas market reaching more quality end users with sales volume and market share rising constantly. The Company's production of oil and gas equivalent reached 479.74 million barrels including 249.60 million barrels of domestic crude which kept flat year-on-year, and 1,199.4 billion cubic feet of natural gas which increased by 11.9% year-on-year.

In 2021, the operating revenues of this segment was RMB 250.0 billion, representing an increase of 49.0% over 2020. This was mainly attributed to the increase of realised price in crude oil and natural gas, and the increase of sales volume of natural gas. In 2021, the oil and gas lifting cost was RMB 776.94 per tonne, representing a year-on-year increase of 6.5%, mainly attributable to the increase in the cost of purchased material, fuels, and power as the international commodities prices increased. In 2021, the operating profit of the exploration and production segment was RMB 4.7 billion, representing an increase of RMB 21.2 billion over the same period of 2020, which was mainly attributable to the fact that the segment promoted high-quality exploration and profitable development, focused on reducing cost, enhanced integrated operation of production, supply, storage and sales.

Exploration and Production: Summary of Operations

Refining

In 2021, the Company seized market recovery and rising oil prices, insisted on integration and optimisation of production and marketing, focused on expanding scale and adjusting structure, and maximized the overall profits along the value chain. Guided by the market demand, we expedited adjustment to increase the yield of chemicals and specialties. We vigorously increased production of gasoline and light chemical feedstock, continued to expand marketing and sales of special products such as low-sulfur bunker fuel, and maintained high utilization rate. The Company optimized resource allocation and achieved significant cost reduction in procurement. We accelerated building up advanced production capacity and promoted structural adjustments. Six hydrogen purification units and filling facilities were built throughout the year. In 2021, the Company processed 255 million tonnes of crude oil, up by 7.8%, yielding 146 million tonnes of refined oil products, with a year-on-year increase of 3.3%. Among them, gasoline output was 65.21 million tonnes, increased by 12.6%, and light chemical feedstock was 45.41 million tonnes, up by 12.9%.

In 2021, the operating revenues of this segment was RMB 1,385.6 billion, representing an increase of 46.8% over 2020. This was mainly attributed to the increase in products' prices and crude oil throughput compared with the same period of last year as a result of growth in market demand which was impacted by the COVID-19 pandemic. In 2021, the refining unit cash operating cost (defined as operating expenses less the processing cost of crude oil and refining feedstock, depreciation and amortisation, taxes other than income tax and other operating expenses, then divided by the throughput of crude oil and refining feedstock) was RMB 213 per tonne, representing an increase of 17.5% over 2020, which was mainly attributed to the increased expense of security, environment protection,and maintenance year-on-year. In 2021, the operating revenue of the segment totaled RMB 65.3 billion, representing an increase of RMB 70.8 billion compared with that of 2020. This was mainly due to the fact that the segment seized the opportunity of market recovery to increase the utilisation rates of facilities and made efforts to optimise the product slate. The inventory gains of crude oil and refined products increased, and the refining margin improved significantly.

Refining: Summary of Operations

Note: Includes 100% of the production of domestic joint ventures.

Marketing and Distribution

In 2021, domestic consumption of refined oil products recovered. The company gave full play to the advantages of integration and marketing network to continuously improve quality and scale for operation. We innovated marketing approaches, implemented precision marketing strategies, and expanded sales. Our network layout for end-users were further optimized, and an internet operation center was established, with online and offline businesses constantly integrated. We actively promoted the construction of comprehensive service stations including oil, gas, hydrogen, electricity and non-fuel businesses and accelerated building up new energy service networks. Total annual sales volume of refined oil products was 221 million tonnes, of which total domestic sales volume amounted to 171 million tonnes, up by 2.0% year-on-year.

In 2021, the operating revenues of this segment was RMB 1,411.5 billion, up by 28.1% year-on-year. This was mainly attributed to the recovery of market demand and thus the increase in the sales volume and price of refined oil products. In 2021, the segment seized the favorable opportunity of market recovery, brought synergy advantages of industrial chain into full play, coordinated internal and external resources, expanded market and increased sales, and continuously expand business volume. Operating profit was RMB 21.2 billion, representing an increase of RMB0.4 billion or 1.8% year-on-year. In 2021, the operating revenues of non-fuel business was RMB 35.4 billion, up by RMB 1.5 billion year-on-year and the profit of non-fuel business was RMB 4.1 billion, up by RMB 0.4 billion. This was mainly because the Company vigorously promoted Company-owned brands and actively explored new business models to maintain the increase of volume and profit of non-fuel businesses.

Marketing and Distribution: Summary of Operations

Chemicals

In 2021, the Company adhered to "basic plus high-end", accelerated the construction of advanced production capacity, strengthened structural adjustment, extended the industrial chain and cultivated growth points. We continuously diversified raw materials, optimized structure and maintenance scheduling of facilities, and maintained high-profitable units' utilization rates. We further integrated process of production, marketing, research and application, strengthened R&D efforts for high-end products and new materials, and increased output of high value-added products such as metallocene polyolefin and carbon fiber. The production ratio of synthetic resin, synthetic rubber, synthetic fiber and fine chemicals with added value were increased by 1.0, 3.5, 1.6 and 3.0 percentage points respectively. The annual ethylene output was 13.38 million tonnes, representing a year-on-year increase of 10.9%. At the same time, we vigorously developed strategic customers and continuously improved the service level. The total operating volume of chemical products in 2021 was 81.6 million tonnes, realizing full production and sales.

In 2021, the operating revenues of this segment was RMB 505.5 billion, up by 36.0% year-on-year. This was mainly due to the steady growth of domestic economy, and the fact that the demand for chemical products still maintained a high level, and the product prices increased year-on-year. In 2021, the Company seized the favorable opportunities of economy recovery and high realised price of chemical products, continuously optimised the structures of feedstock, product and facilities, and achieved growing profits with increased margins of petrochemicals. The operating profit of this segment was RMB 11.1 billion, representing an increase of 2.7% over 2020.

Major Chemical Products: Summary of Operations Unit of production: 1,000 tonne

Note: Includes 100% of the production of domestic joint ventures.

Research and Development

In 2021, the Company deepened the reform of science and technology system and mechanism, increased science and technology investment, promoted key core technology research, and achieved fruitful results, giving full play to the leading role of science and technology in industrial development. In upstream, new progress was made in exploration theory and breakthrough was achieved in key technology for exploration and development of Sichuan Basin and Shunbei area. In refining, the world's first industrial test of full distillates crude oil catalytic cracking technology was completed. The industrial application of MFP technology, which produces more propylene and low-sulfur fuel, realized a breakthrough. We also successfully developed and produced needle coke products. In chemicals, we took the lead in completing the industrial test of direct cracking of crude oil to ethylene in China, and we successfully developed 15 new lightweight products for green and environment-friendly vehicles, such as carbon fiber reinforced epoxy resin composites. Breakthroughs were made in the development of hydrogenated styrenic thermal-plastic elastomer. In 2021, the Company had 8,045 patent applications at home and abroad, among which 4,868 were granted.

Health and Safety

In 2021, the Company comprehensively promoted HSE management system and continuously strengthened management. We focused on employees' health, safety and security management, enhanced pandemic prevention and control mechanism, and improved emergency response capacity, so as to maintain occupational, physical and mental health of employees at home and abroad. We implemented production safety responsibility among all employees, popularized prevention mechanisms of safety risk controlling and hidden risks shooting. We promoted the pilot project of Industrial Internet plus Safe Production, carried out special actions including a 3-year rectification program for production safety, and A Hundred Days without Accidents activity. The Company witnessed overall stable and safe production in 2021.

Capital Expenditures

In 2021, focusing on investment quality and return, the Company continued to optimize investment management. The capital expenditures for the year were RMB 167.9 billion. Capital expenditures for the exploration and production segment were RMB 68.1 billion, mainly used for crude production capacity construction in Shunbei Oilfield, natural gas production capacity construction in Western Sichuan, Fuling and Weirong, storage and transmission facilities of Tianjin LNG Phase II and Qingdao LNG Phase III, and the CCUS Project in Shengli Oilfield. The capital expenditures of the refining segment were RMB 22.5 billion, mainly used for the expansion of Zhenhai refinery and structural adjustment of Anqing and Yangzi refineries. The capital expenditures of the marketing and distribution segment were RMB 21.9 billion, mainly used for service stations, integrated energy stations and logistics facilities. The capital expenditures of the chemicals segment were RMB 51.6 billion, mainly used for Zhenhai, Sinopec-SK, Hainan, Tianjin Nangang, Gulei ethylene projects, AGCC project, Jiujiang Aromatics project, Shanghai large-tow carbon fiber project, Yizheng PTA project, Guizhou PGA project, and Qilu CCUS project. The capital expenditures for corporate and others were RMB 3.8 billion, mainly for scientific and technological research and development and IT.

Business Prospects

Looking forward to 2022, the world economic growth is expected to maintain recovery. China's economy is expected to achieve stable growth, and the long-term positive fundamentals will remain unchanged. It is expected that the market demand for refined oil products will continue to recover, and that for natural gas and petrochemical products will continue to grow. Oil prices may face greater volatility risks due to geopolitical situation, changes in global supply and demand, inventory levels, and carbon peaking and neutrality targets.

In 2022, guided by the development strategy of building a world-leading company, the Company will focus on optimization of production and operation, transition and development, technology innovation, reform and management, and risk prevention and control to march toward its targets firmly. The following are specific measures:

Exploration and production segment: The Company will enhance risk exploration and trap pre-exploration efforts, strengthen profitable development, and speed up the construction of natural gas production, supply, storage and marketing system, so as to achieve better results in oil production stabilization, gas production increase, cost reduction and efficiency improvement. In terms of crude oil development, the Company will scale up the production in Shunbei and Tahe oilfields, accelerate the construction of the national demonstration zone of continental facies shale oil in Jiyang, and refine the development of mature oilfields, so as to achieve steady crude oil production growth and a significant decrease in the break-even point. In terms of natural gas development, the Company will accelerate the capacity building of Dongsheng and Western Sichuan gas fields, further expand and tap the potential of Puguang, Yuanba gas fields, and deepen the development adjustment of Fuling gas field. At the same time, more efforts will be made in taking a diversified approach to expand resource channels, cultivate high-quality and efficient end-user markets, and maintain the good momentum of natural gas development. The planned annual production of crude oil is 281.20 million barrels, of which 31.28 million barrels will come from overseas and that of natural gas is 1,256.7 billion cubic feet.

Refining segment: The Company will prioritize structural adjustment and cost reduction, speed up the construction of world-class refining and chemical bases, and promote the systemic improvement of the refining value chain. Oriented by profitability, the Company will make appropriate arrangement for facilities utilization and production scheduling, flexibly adjust the yield of refined oil products and diesel-gasoline ratio; dynamically optimize the allocation of crude oil resources to reduce procurement costs; accelerate the shift from refined oil products to chemicals, increase the production of chemical raw materials, improve the self-sufficiency rate of chemical feedstocks; speed up the shift form refined oil products to refining specialties products, expand the market of special products such as low-sulfur bunker fuel, lubricating grease, base oil, needle coke, etc., and improve profitability. The annual plan for crude oil throughput is 258 million tonnes and that for refined oil products production is 147 million tonnes.

Marketing and distribution segment: Giving full play to integrated advantages, the Company will make every effort to expand the market, improve efficiency, and consolidate its position in the energy market. The Company plans to improve the market monitoring system, implement well-targeted marketing strategies, increase both retailing sales volume and efficiency; implement network development strategies by different regions and levels, continue to optimize network layout, enhance network integrity, stability and competitiveness; strengthen the development of Sinopec-brand products, improve the quality and profitability of non-fuel business; promote gas and hydrogen refueling, power charging and battery swapping, build integrated energy stations covering gasoline, diesel, gas, hydrogen, electricity and non-fuel services; and accelerate the construction of carbon-neutral gas stations. The annual domestic sales volume of refined oil products is planned to be 174 million tonnes.

Chemicals segment: Adhering to "basic + high-end", the Company will promote the building of advanced capacity, speed up the deployment of large-scale ethylene plants, promote the upgrading and appropriate extension of the aromatics industry chain, continuously enhance market competitiveness; diversify raw materials, enhance the cost advantage; dynamically optimize and adjust the utilization, continue to promote facilities' operation efficiency; stay market-oriented, vigorously develop new materials and applications with high added value and advanced technology. Meanwhile, we will optimize the mechanism to respond to market need rapidly, strengthen refined management, and improve service quality and efficiency. The planned annual ethylene production is 15.25 million tonnes.

Technological development: Following the innovation-driven strategy, the Company aims to make breakthroughs in core technologies, promote the mechanism reform of the technological system, and accelerate the intelligent application and digital transformation to build a technology-leading company. Specific focuses include technology breakthroughs in oil and gas exploration and production with the emphases on oil production stabilization, gas production increase, cost reduction, and efficiency improvement, oil and gas reserves and production increase; coordinated development of integration of refining and chemical technologies, refined oil products structure optimization, clean, efficient and low-carbon utilization of resources; key raw materials and high-end new materials development, coordination of the development and application of technologies such as safety and environmental protection; energy conservation and emission reduction, and intelligent optimization; forward-looking and basic research on such areas as green and low-carbon, new energy, and new materials to support industrial transition and upgrading.

Capital expenditures: in 2022, the Company's planned capital expenditures are RMB 198 billion, of which, RMB 81.5 billion will be for the exploration and production segment, including the construction of crude oil production capacity in Shunbei and Tahe oilfields, and natural gas production capacity in Western Sichuan, Dongsheng and Zhongjiang and construction of storage and transmission facilities such as Longkou LNG. Capital expenditures for the refining segment will be RMB 20.4 billion, mainly for the construction of Anqing, Yangzi refinery structural adjustment projects and Zhenhai refinery Phase II. Capital expenditures for the marketing and distribution segment will be RMB 23.7 billion, mainly used for the construction of service stations, integrated energy stations and logistics facilities. The capital expenditures of the chemicals segment will be RMB 66.1 billion, which will be mainly used for Hainan and Tianjin Nangang ethylene projects, Jiujiang Aromatics project, Shanghai large-tow carbon fiber project, Yizheng PTA project, Guizhou PGA project, Zhenhai Refinery Phase II. Capital expenditures for corporate and others are planned to be RMB 6.3 billion, which will be mainly used for research and development and IT.

Appendix: Key financial data and indicators
FINANCIAL DATA AND INDICATORS PREPARED IN ACCORDANCE WITH ASBE

Principal accounting data

FINANCIAL DATA AND INDICATORS PREPARED IN ACCORDANCE WITH IFRS

Principal accounting data

Principal accounting data

The following table sets forth the operating revenues, operating expenses and operating profit by each segment before elimination of the inter-segment transactions for the periods indicated, and the percentage changes between 2021 and 2020.

About Sinopec Corp.

Sinopec Corp. is one of the largest integrated energy and chemical companies in China. Its principal operations include the exploration and production, pipeline transportation and sale of petroleum and natural gas; the production, sale, storage and transportation of refinery products, petrochemical products, coal chemical products, synthetic fibre, and other chemical products; the import and export, including an import and export agency business, of petroleum, natural gas, petroleum products, petrochemical and chemical products, and other commodities and technologies; and research, development and application of technologies and information; hydrogen energy business and related services such as hydrogen production, storage, transportation and sales; battery charging and swapping, solar energy, wind energy and other new energy business and related services。

Disclaimer

This press release includes "forward-looking statements". All statements, other than statements of historical facts that address activities, events or developments that Sinopec Corp. expects or anticipates will or may occur in the future (including but not limited to projections, targets, reserve volume, other estimates and business plans) are forward-looking statements. Sinopec Corp.'s actual results or developments may differ materially from those indicated by these forward-looking statements as a result of various factors and uncertainties, including but not limited to the price fluctuation, possible changes in actual demand, foreign exchange rate, results of oil exploration, estimates of oil and gas reserves, market shares, competition, environmental risks, possible changes to laws, finance and regulations, conditions of the global economy and financial markets, political risks, possible delay of projects, government approval of projects, cost estimates and other factors beyond Sinopec Corp.'s control. In addition, Sinopec Corp. makes the forward-looking statements referred to herein as of today and undertakes no obligation to update these statements.

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File: Sinopec Achieved 10-year Record High Performance Focus on Shareholder Returns with H-share Annualized Dividend Yield of 14.3%

SOURCE: China Petroleum & Chemical Corporation