Net profit shrank by 18.5 billion yuan, but Sinopec still maintains generous dividends, with an estimated total payout of 24.2 billion yuan for the year.

A report from Beijing, China, by He Yihua and Li Weilai of chinatimes.net.cn

Among the “Three Barrel Oils,” China Petroleum & Chemical Corporation (Sinopec, 600028.SH) was the first to release its 2025 annual report.

Affected by factors including global international crude oil prices fluctuating and trending downward in 2025, increasing pressure from disruptive alternative energy sources, and oversupply of capacity in the chemical industry, Sinopec recorded operating revenue of RMB 2.78 trillion in 2025, down 9.46% year over year; net profit attributable to shareholders of RMB 31.809 billion, down 36.78% year over year; and net profit after deducting non-recurring gains and losses of RMB 29.529 billion, down 38.55% year over year. This marks the fourth consecutive year of decline in net profit attributable to shareholders since 2022.

Despite the performance slump, Sinopec still carried out generous dividend payouts. According to its 2025 annual profit distribution plan, the company plans to pay cash dividends of RMB 13.544 billion (tax included). Together with interim dividends and the amount repurchased during the year, when calculated on a consolidated basis under China’s corporate accounting standards, the profit distribution payout ratio reaches 81%.

Entering 2026, disruption to navigation through the Strait of Hormuz poses challenges to the company’s production and operations. At the 2025 annual results briefing held on March 23, Wan Tao, Sinopec’s director and president, said that, due to unfavorable factors such as a sharp rise in crude oil prices, tight supplies of imported crude oil resources, and high freight rates, Sinopec’s refining and chemical businesses face significant challenges in their production and operations. Meanwhile, under current oil prices, the upstream business can achieve relatively good returns.

Crude oil prices fall

Sinopec’s performance declines again.

After net profit attributable to shareholders doubled in 2021, Sinopec has seen four consecutive years of performance downturn. From 2022 to 2025, the company’s net profit attributable to shareholders was RMB 67.082 billion, RMB 60.463 billion, RMB 50.313 billion, and RMB 31.809 billion, respectively; these amounts represent year-over-year declines of 6.89%, 9.87%, 16.79%, and 36.78%, respectively.

Sinopec’s main businesses are petroleum and natural gas, as well as chemical businesses. The company’s main products include crude oil, natural gas, gasoline, diesel, kerosene, basic chemical feedstocks, spunbond and single monomer and polymers, synthetic resins, synthetic fibers, synthetic rubber, and fertilizers.

The financial report shows that Sinopec’s main businesses are mainly composed of marketing and distribution, refining, chemicals, and exploration and development. In 2025, it achieved operating revenue of RMB 1,505.3 billion, RMB 1,328.5 billion, RMB 464.1 billion, and RMB 256.0 billion, respectively, with year-over-year declines of 12.2%, 10.3%, 11.4%, and 3.8%, respectively.

Regarding the reasons for the revenue decline, Sinopec said in its annual report that the decline is mainly attributable to lower prices of petroleum and petrochemical products as well as reduced sales volumes of products such as refined oil. Data show that in 2025 international crude oil prices generally trended downward; the full-year average spot price of Platts Brent crude was 69.1 dollars per barrel, down 14.5% year over year.

Bi Mingxin, a refined oil analyst at Jinlianchuang, told reporters that in 2025, international oil prices, overall, presented a pattern of falling first and then broad-range trading. “On the fundamentals, global oil supply grew further in 2025. On the demand side, global oil demand also grew further during the year, but the year-over-year growth rate hit a five-year low. In addition, the growth rate of Asian oil demand—one of the main drivers of global demand growth—slowed down. Therefore, the global oil demand growth rate will further slow down this year.”

Entering 2026, due to a navigation crisis in the Strait of Hormuz, international crude oil prices rose sharply. Wan Tao pointed out at the 2025 results briefing held on March 23 that the company’s refined oil sales business is generally stable, and the upstream business can still achieve relatively good returns under current oil prices.

Wan Tao further said that, as of now, the company’s crude oil and refined oil inventories can ensure stable production and operations. “We will strengthen market research and analysis, dynamically optimize and adjust production and operations arrangements, meet domestic market demand, and maintain stable production and operations.”

Refining and chemicals face pressure

Looking ahead, crude oil prices may be hard to return to low levels. Bi Mingxin told reporters that in 2026, international crude oil prices may show characteristics of high-level sideways trading, with the annual mid-point significantly higher than in 2025. Geopolitical risk premium is the core disruptive factor. Based on the full-year forecast, the U.S. WTI main futures contract is expected to trade in the range of 55 to 95 dollars per barrel; Brent crude is expected to trade in the range of 60 to 110 dollars per barrel.

Rising crude oil prices are a negative factor for downstream refining and chemical sectors. Wan Tao candidly said, “If the Middle East geopolitical conflict continues for a long time, it will bring enormous challenges to the company’s refining and chemicals business. The company has also formulated multiple sets of contingency plans to address challenges under different scenarios.”

A securities firm investment adviser analyzed for reporters that crude oil is the core cost for refining and chemicals. When crude oil prices rise, production costs increase directly. Meanwhile, downstream product prices are not effectively transmitted and demand faces pressure, which ultimately squeezes the profit space of the refining and chemicals segment significantly. Therefore, rising crude oil prices are, overall, a negative factor for the refining and chemicals industry.

In 2025, affected by soft domestic demand for refined oil, Sinopec’s refined oil sales volume continued to fall year over year. Total refined oil sales volume for the full year was 229 million tons, down 4.3% year over year. Specifically, it achieved diesel sales revenue of RMB 316.7 billion, down 16.4% year over year; kerosene sales revenue of RMB 120.0 billion, down 8.5% year over year; and sales revenue of chemical feedstock category products of RMB 173.5 billion, down 8.4% year over year.

Sinopec’s chemical business continued to incur losses. In 2025, due to factors including rapid release of新增 capacity, narrowing profit margins on chemical products, and impairment losses on some units, the company’s operating loss was RMB 14.6 billion, widening the loss by RMB 4.6 billion year over year.

Looking ahead, the chemical segment will continue to face pressure. At the results briefing, Sinopec’s chairman Hou Qijun said that it is expected that domestic demand for chemical products will still grow this year. At the same time, domestic newly added capacity will continue to be released. Structural oversupply pressure in the chemical market will remain. Combined with the Middle East geopolitical conflict causing sharp rises in oil prices and prices of naphtha and other products, chemical gross margins will face significant pressure.

In response, Hou Qijun said that the company will strengthen assessments of international situations and market conditions, respond quickly, and dynamically adjust production and operations arrangements. It will optimize unit loads with “one unit, one policy,” adjust product structure, and keep production and operations stable and orderly.

The second growth curve

Given the long-term challenges of refining capacity oversupply and the plateauing of fuel demand, the “Three Barrel Oils” are turning toward the new energy direction. Sinopec focuses on building itself as a comprehensive energy service provider for “oil, gas, hydrogen, and power services,” creating a second growth curve.

At the results briefing, Hou Qijun said the company is accelerating the development of the hydrogen-energy industry as an important new-energy business. During the “14th Five-Year Plan” period, it remains committed to its goal of firmly building “China’s first hydrogen energy company.” The financial report shows that the company’s hydrogen refueling volume has maintained the top domestic market share. It has built and commissioned more than 13,000 charging and swapping stations. In 2025, the charging volume on its charging and operations platform exceeded 5 billion kilowatt-hours, up nearly 200% year over year.

In 2025, Sinopec also announced a further deepening of its long-term strategic cooperation with Contemporary Amperex Technology Co., Limited (CATL). Through a “industry cooperation + capital cooperation” approach, the two parties will build a nationally unified ecosystem for battery swapping network operations and standards, with unified management and operations of swapped-battery assets. Next, both sides will fully leverage their respective advantages to further expand cooperation in areas such as battery swapping, zero-carbon initiatives, microgrids, vehicle ecosystems, and battery materials, actively building a second growth curve.

At the same time, Sinopec is actively returning value to shareholders and investors. According to its 2025 annual profit distribution plan, the company plans to pay cash dividends of RMB 13.544 billion (tax included). Together with interim dividends in 2025, the company’s total dividends for the full year will be RMB 24.206 billion. If the amount paid for share buybacks of A shares and H shares is included, the company’s full-year dividend payout ratio will reach 81%.

Looking ahead to 2026, Sinopec plans full-year capital expenditures of RMB 131.6 billion to RMB 148.6 billion. The company plans to produce 281 million barrels of crude oil for the full year; about 41.68 billion cubic meters of natural gas; process 250 million tons of crude oil to produce 148 million tons of refined oil.

Responsible editor: Li Weilai
Editor-in-chief: Zhang Yuning