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August 29, 2005Hong Kong
China Petroleum & Chemical Corporation
1H 2005 Results Announcement
22005-8-29
This presentation and the presentation materials distributed herewith include
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, 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
price fluctuations, actual demand, exchange rate fluctuations, exploration and
development outcomes, estimates of proven reserves, competition, environmental risks,
changes in legal, financial and regulatory frameworks, international economic and
financial market conditions, political risks, project delay, project approval, cost estimates
and other risks and factors beyond our control. In addition, Sinopec Corp. makes the
forward-looking statements referred to herein as of today and undertakes no obligation to
update these statements.
Disclaimer
32005-8-29
• 1H 2005 Business Review
• 1H 2005 Financial Performance
• 2H 2005 Business Prospects
Agenda
4
1H 2005 Business Review
52005-8-29
Market Environment
• China’s economy maintained steady growth with GDP at 9.5%
– Domestic consumption of oil products increased by 5.56%
– Domestic consumption of petrochemicals (ethylene equivalent) increased by 5.70%
• Crude oil price climbed to a record high
• Petrochemical prices remained high albeit somewhat down from 4Q 2004
• Price control on refined oil products remained in effect
62005-8-29
7.275
4.81 5.583
1.9260.544
Profit Continues to Grow
EBIT Analysis
1H 2004 1H 2005
EBIT Total28.562
EBIT Total33.682
RefiningProfit Change
ChemicalsProfit Growth
E&P Profit Growth
MarketingProfit Change Corporate
& Others
Unit: RMB billion
72005-8-29
Crude oil production (mm bbls) 136.69 135.85 0.62
Natural gas production (bcf) 104.8 100.06 4.74
Lifting cost (USD/bbl) 6.98 6.28 11.15
Newly added proved oil & gas reserves (mm bo
e) 172.04 269.86 -36.25
E&P – Stable Production
1H 05 1H 04 Change (%)
Period-end proved oil and gas reserves (mm boe) 3,791 3,773 0.48
30 June 2005 31 Dec. 2004 Change (%)
82005-8-29
E&P Segment Performance
29.62
39.40
2.262.08
0
5
10
15
20
25
30
35
40
45
1H 2004 1H 2005
0
1
2
3
4
Crude Oil Natural Gas
10,520
17,795
0
5,000
10,000
15,000
20,000
1H 2004 1H 2005
Crude Oil and Natural GasRealized Price
RMB million
EBIT of E&P Segment
Crude OilUSD/bbl
Natural GasUSD/mcf
92005-8-29
Refining– Efficient Operation at Full Utilization
Crude Oil Processed (mm tonnes) 68.08 64.98 4.77
- Sour Crude Oil Processed (mm tonnes) 16.87 13.39 25.99
Gasoline Production (mm tonnes) 11.32 11.42 -0.88
Diesel Production (mm tonnes) 26.31 24.72 6.43
Kerosene Production (mm tonnes) 3.39 3.03 11.88
Light Chemical Feedstock Production (mm tonnes) 10.16 8.92 13.90
Light Yield (%) 74.24 74.06 18 bps
Refining Yield (%) 93.11 93.10 1 bp
1H 05 1H 04 Change (%)
102005-8-29
Refining Segment Performance
2.32
4.07
1.98 1.93
0.00
1.00
2.00
3.00
4.00
5.00
1H 2004 1H 2005
1.00
1.50
2.00
2.50
3.00
3.50
Refining Margin Cash Operating Cost
-1,296
4,287
-2,000
-1,000
0
1,000
2,000
3,000
4,000
5,000
1H 2004 1H 2005
EBIT of Refining SegmentRefining Margin / Cash Operating Cost
USD/bblRMB million
112005-8-29
Marketing - Optimized Marketing Network, Expanded Retail and Distribution
Domestic sales of refined oil products (mm tonnes)
50.77 45.49 11.61
Incl. Retail (mm tonnes) 29.56 25.12 17.68
Distribution (mm tonnes) 10.39 9.56 8.68
Total gas stations 30,352 30,682 -1.08
Incl. Self-operated stations 26,870 25,306 6.18
Franchised stations 3,482 5,376 -35.23
Annual average throughput of self-operated st
ations (tonnes/station)2,200 1,986 10.78
1H 05 1H 04 Change (%)
122005-8-29
Marketing Segment Performance
8,569
6,643
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
1H 2004 1H 2005
2000
3000
4000
5000
Jan Mar May Jul Sep Nov
2003 2004 2005
2000
3000
4000
5000
Jan Mar May Jul Sep Nov
2003 2004 2005149.93153.38Marketing cash operating cost (RMB/tonne)
1H20051H2004
EBIT of Marketing SegmentRON #90 Gasoline Guidance PriceRMB/Tonne
#0 Diesel Guidance Price
RMB/Tonne
RMB million
132005-8-29
Chemicals — Production Aligned with Market Demand
Unit: 1,000 tonnes
Ethylene 2,434 2,081 16.96
Synthetic resin 3,528 3,102 13.73
Incl. performance compound 1,689 1,545 9.32
Synthetic rubber 308 297 3.70
Monomers & polymers for synthetic fibers 3,152 3,030 4.03
Synthetic fiber 756 824 -8.25
Incl. differential fiber 384 359 6.96
Urea 998 1,322 -24.51
Data above for 1H 2004 and 1H 2005 include production from the chemical assets acquired from Sinopec Group at the end of 2004. 100% production from YPC-BASF and Shanghai-Secco was calculated into the statistics in 2005.
1H 05 1H 04 Change (%)
142005-8-29
Chemicals Segment Performance
10,815
6,005
0
2,000
4,000
6,000
8,000
10,000
12,000
1H 2004 1H 2005
148.87142.64Ethylene cash operating cost (USD/tonne)
1H20051H2004
EBIT of Chemicals Segment Chemicals Price Spread (1990 - Jul. 2005)RMB million
USD/tonne
0
200
400
600
800
1000
1200
Jan-1990 Jan-1993 Jan-1996 Jan-1999 Jan-2002 Jan-2005
LDPE-Naphtha PP-Naphtha
152005-8-29
Cost Reduction
Total cost reduction reached RMB 1.282 billion in 1H 2005
RMB million
0
500
1,000
1,500
2,000
2,500
3,000
2005 Plan 1H 2005 Actual
E&P Refining Marketing Chemicals
2,500
1,282
162005-8-29
Capital Expenditure
1H 2005 Capex: RMB22.55 bn• E & P –10.077 bn, focus on progressive expl
oration in the existing blocks and pre-exploration in new blocks
• Refining – 3.451 bn, second phase of Ningbo-Shanghai-Nanjing pipeline is close to completion, and a number of revamping projects are progressing smoothly
• Marketing – 6.384 bn, south-west oil pipeline at its final stage, construction and acquisition of petrol stations on schedule
• Chemicals – 2.242 bn, a batch of key revamping projects, such as Maoming ethylene project and chemical fertilizer revamping projects, progressed smoothly
1H 2005 Capex Breakdown
In addition, RMB1.854 bn invested in Shanghai-Secco and other JV projects
0
10
20
30
40
50
60
70
2005 Plan 1H 2005 Actual
E&P RefiningMarketing ChemicalsCorporate & Others
62.00
22.55
RMB billion
17
1H 2005 Financial Performance
182005-8-29
Significant Growth in Profit
Unit: RMB million
Turnover and other operating revenues 368,454 279,445 31.85
EBITDA 48,837 43,961 11.09
EBIT 33,682 28,562 17.93
Profit for the period 21,769 18,921 15.05
Attributable to equity holders of the parent 19,653 16,746 17.36
Minority interests 2,116 2,175 -2.71
EPS (RMB) 0.227 0.193 17.36
1H 05 1H 04 Change (%)
192005-8-29
Financial Highlights
Unit: RMB million
Short-term debt 39,374 32,307
Long-term debt 73,735 60,822
Equity attributable to equity holders of the parent 205,757 193,040
Cash flow from operating activities 21,082 20,698
Cash flow for investing activities 31,400 31,050
Cash flow from financing activities 7,553 9,500
Cash & cash equivalents - opening balance 16,381 16,263
Cash & cash equivalents - ending balance 13,616 15,410
As of 30 June 2005 As of 31 Dec. 2004
1H 05 1H 04
202005-8-29
Returns and Dividends
0.040.040.03
0.08
0.06
0.00
0.02
0.04
0.06
0.08
0.10
0.12
0.14
2003 2004 2005
Interim Dividend Final Dividend
ROCE
9.01%
12.84%
6.17%
0%
2%
4%
6%
8%
10%
12%
14%
2003 2004 1H 2005
ROCE for 1H 2005 was not annualized
DividendsRMB Yuan
21
2H 2005 Business Prospects
222005-8-29
Market Environment in 2H 2005
• China’s economy is expected to maintain rapid growth
– Demand for oil products and petrochemicals will increase steadily
• Crude oil price will remain high and volatile
• Global refining and chemical sectors should remain favorable
• Appreciation of RMB will lower the purchasing cost of crude oil
• Price control on refined oil products will remain effective
232005-8-29
E & P
• Implement aggressive resource strategy, expedite exploration and development, pursue 100% reserve replacement
• Build up production capacity in Tahe oilfields in western China and shallow water blocks of Shengli oilfields in eastern China
• Expand natural gas market
Crude oil production (mmbbl) 140.20 136.69 2.57
Natural gas production (bcf) 1,090 1,048 4.01
1H Actual Change%2H Plan
242005-8-29
• Diversify crude resources to reduce purchasing cost
• Take advantage of pipeline transportation and optimize resource allocation to reduce transportation cost
• Adjust crude oil processing scheme and product mix to increase high value-added product volumes
• Strengthen management and ensure safe, stable and efficient operation
Refining
Crude throughput (million tonnes) 72.00 68.08 5.76
1H Actual Change%2H Plan
252005-8-29
• Conduct market analysis and expand sales volumes appropriately
• Strengthen management of stations to increase retail and direct sales volumes
• Fully leverage logistics network to optimize allocation of resources, to reduce cost
• Expedite construction of pipelines and stations in strategic locations to further optimize network
• Accelerate application of petrol IC cards to realize the target of “One Card, All Sinopec Stations”
Marketing
Total domestic sales (million tonnes) 52.00 50.77 2.42
Incl. Retail (million tonnes) 30.40 29.56 2.84
Direct sales (million tonnes) 10.60 10.39 2.02
1H Actual Change%2H Plan
262005-8-29
Chemicals
• Fully exploit newly added capacity and increase production of
major chemical products
• Implement market-oriented strategies and increase production of
performance compound resins and differential fibers
• Fully leverage newly established Chemical Sales Company and
improve competitiveness
Ethylene production (million tonnes) 2.75 2.434 12.98
1H Actual Change%2H Plan
272005-8-29
Conclusion
• Continue to implement operating strategy of “Reform,
Adjustment, Innovation, and Development”
• Strive to achieve whole year operating targets
• Maintain sound operating performance
Achieve sustainable and efficient growth
282005-8-29
http://www.sinopec.com
For Further Information
Investor Relations
Beijing: Tel: (8610) 64990060 Fax: (8610) 64990489Email: [email protected]
Hong Kong: Tel: (852) 28242638 Fax: (852) 28243669Email: [email protected]
New York: Tel: (212) 759 5085 Fax: (212) 759 6882Email: [email protected]
Media Relations
Tel: (8610) 64990092Fax: (8610) 64990093Email: [email protected]