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.

This report (chinatimes.net.cn) is reported by He Yihua and Li Weilai from Beijing.

Among the “Three Oil Giants,” Sinopec (600028.SH) was the first to release its annual report for 2025.

Affected by the downward volatility of international oil prices in 2025, intensified competition from alternative energy, and overcapacity in the chemical industry, Sinopec achieved an operating income of 2.78 trillion yuan, a year-on-year decrease of 9.46%; the net profit attributable to shareholders was 31.809 billion yuan, a year-on-year decrease of 36.78%; the net profit excluding non-recurring items was 29.529 billion yuan, a year-on-year decrease of 38.55%. This marks the fourth consecutive year of decline in net profit attributable to shareholders since 2022.

Despite the decline in performance, Sinopec still announced significant dividends. According to the 2025 annual profit distribution plan, the company intends to distribute a cash dividend of 13.544 billion yuan (before tax), and combined with the mid-term dividend and the buyback amount during the year, the profit distribution rate calculated according to Chinese accounting standards reaches 81%.

As 2026 begins, the interruption of navigation in the Strait of Hormuz presents challenges to the company’s production and operations. At the performance briefing for the 2025 annual results held on March 23, Sinopec’s director and president, Wan Tao, stated that the company’s refining and chemical business faces significant challenges due to adverse factors such as a sharp rise in crude oil prices, tight imports of crude oil resources, and high freight rates, while upstream operations can achieve better profits at current oil prices.

Crude Oil Prices Decline

Sinopec’s performance has once again declined.

After doubling its net profit attributable to shareholders in 2021, Sinopec has faced four consecutive years of declining performance. From 2022 to 2025, the net profits attributable to shareholders were 67.082 billion yuan, 60.463 billion yuan, 50.313 billion yuan, and 31.809 billion yuan, respectively, with year-on-year declines of 6.89%, 9.87%, 16.79%, and 36.78%.

Sinopec’s main business is petroleum and natural gas and chemical operations. The company’s main products are crude oil, natural gas, gasoline, diesel, kerosene, basic chemical raw materials, synthetic monomers and polymers, synthetic resins, synthetic fibers, synthetic rubber, and fertilizers.

The financial report shows that Sinopec’s main business is primarily composed of marketing and distribution, refining, chemicals, exploration, and development, achieving operating incomes of 1.5053 trillion yuan, 1.3285 trillion yuan, 464.1 billion yuan, and 256 billion yuan in 2025, with year-on-year declines of 12.2%, 10.3%, 11.4%, and 3.8%, respectively.

Regarding the reasons for the revenue decline, Sinopec stated in its annual report that it was mainly attributed to the decrease in prices of petroleum and petrochemical products as well as sales volumes of refined oil products. Data shows that in 2025, international crude oil prices fluctuated downward, with the Platts Brent crude spot price averaging $69.1 per barrel for the year, a year-on-year decrease of 14.5%.

Analyst Bi Mingxin from Jinlianchuang told reporters that in 2025, international oil prices showed an overall downward trend followed by wide fluctuations. “Fundamentally, global oil supply is expected to grow further in 2025, while global oil demand is projected to increase, but the year-on-year growth rate is at its lowest in nearly five years, and the growth rate of oil demand in Asia, the main driver of global demand growth, is slowing. Therefore, the growth rate of global oil demand is expected to further slow this year.”

Entering 2026, due to the navigation crisis in the Strait of Hormuz, international crude oil prices surged significantly. Wan Tao, Sinopec’s director and president, pointed out at the 2025 annual performance meeting held on March 23 that the company’s refined oil sales business remains stable overall, and upstream operations can achieve better profits at current oil prices.

Wan Tao further stated that the company’s crude oil and refined oil inventories can ensure stable production and operations. “We will strengthen market assessments and analyses, dynamically optimize and adjust production and operational arrangements to meet domestic market demand and maintain stable production and operations.”

Refining Sector Under Pressure

Looking ahead, crude oil prices may struggle to return to low levels. Bi Mingxin told reporters that in 2026, international crude oil prices are expected to exhibit characteristics of high-level fluctuations, with the annual average significantly higher than in 2025, with geopolitical risk premiums being the core disruptive factor. For the entire year, the U.S. crude oil main contract is expected to range between $55 and $95 per barrel; Brent crude is expected to range between $60 and $110 per barrel.

The rise in crude oil prices is a negative for downstream refining and chemical sectors. Wan Tao admitted, “If the geopolitical conflicts in the Middle East persist for a long time, it will pose tremendous challenges to the company’s refining business. The company has already developed multiple contingency plans to address challenges under different scenarios.”

An investment advisor from a brokerage analyzed for reporters that crude oil is the core cost of refining, and rising crude oil prices directly increase production costs, while downstream product prices do not transmit effectively, and demand is under pressure, ultimately leading to a significant squeeze on the profitability of the refining sector. Therefore, rising crude oil prices are generally unfavorable for the refining industry as a whole.

In 2025, due to weak domestic demand for refined oil, Sinopec’s refined oil sales volume continued to decline year-on-year, with total refined oil sales volume for the year at 229 million tons, a year-on-year decrease of 4.3%. Specifically, the sales revenue from diesel amounted to 316.7 billion yuan, a year-on-year decline of 16.4%; sales revenue from kerosene reached 120 billion yuan, a year-on-year decline of 8.5%; and sales revenue from chemical raw materials was 173.5 billion yuan, a year-on-year decline of 8.4%.

Sinopec’s chemical business has been continuously losing money. In 2025, affected by the rapid release of new production capacity, narrowing margins on chemical products, and impairment losses on certain equipment, the company’s operating loss amounted to 14.6 billion yuan, an increase in losses of 4.6 billion yuan year-on-year.

Looking ahead, the chemical sector will continue to face pressure. Sinopec’s chairman, Hou Qijun, stated at the performance briefing that domestic demand for chemical products is expected to continue growing this year, while new domestic production capacity continues to be released. The structural overcapacity in the chemical market remains, compounded by geopolitical conflicts in the Middle East that lead to significant rises in oil and naphtha prices, putting considerable pressure on chemical margins.

In response, Hou Qijun stated that the company will enhance assessments of international situations and markets, respond quickly, and dynamically adjust production and operational arrangements, optimizing device loads on a “one device, one strategy” basis, and adjusting product structures to maintain stable and orderly production and operations.

Second Growth Curve

Faced with the long-term dilemma of overcapacity in refining and peak fuel demand, the “Three Oil Giants” are all transitioning towards new energy. Sinopec is focused on building a comprehensive energy service provider with “oil, gas, hydrogen, electricity, and services,” creating a second growth curve.

Hou Qijun stated at the performance briefing that the company is accelerating the development of the hydrogen energy industry as an important new energy business, firmly committed to establishing the goal of “China’s first hydrogen energy company” during the 14th Five-Year Plan period. The financial report shows that the company maintains the largest domestic market share in hydrogen refueling, having built over 13,000 charging and battery swap stations, with charging volume on the charging operation platform exceeding 5 billion kilowatt-hours in 2025, a year-on-year growth of nearly 200%.

In 2025, Sinopec also announced a deepening of its long-term strategic partnership with CATL, through “industrial cooperation + capital cooperation,” to build a national battery swap network ecosystem and standardize the management and operation of battery swap assets. The next step for both parties will be to leverage their respective advantages to further expand cooperation in battery swapping, zero carbon, microgrids, vehicle ecology, battery materials, and other areas, actively creating a second growth curve.

At the same time, Sinopec is actively returning value to shareholders and investors. According to the 2025 annual profit distribution plan, the company intends to distribute a cash dividend of 13.544 billion yuan (before tax), and with the mid-term dividend of 2025, the total dividends distributed for the year will amount to 24.206 billion yuan. If the amounts paid for the buyback of A-shares and H-shares are included, the company’s annual dividend payout ratio will reach 81%.

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

Editor: Li Weilai Chief Editor: Zhang Yuning