China fuel demand boosts Sinopec profit, record dividend planned

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Shanghai (AFP)

China's Sinopec, the world's largest oil refiner, said its annual profit for 2017 grew 10 percent due to strength in its key fuels and chemical operations, and announced a record dividend payout.

The company's Hong Kong-listed shares climbed more than three percent on Monday following the earnings announcement, and were up 2.88 percent at HK$6.78 in late afternoon trade. However, its Shanghai-listed shares slipped 2.78 percent to 6.64 yuan.

Net profit grew 10.13 percent to 51.1 billion yuan ($8.1 billion), the company, whose official name is China Petroleum & Chemical Corp, said in a statement submitted to the Hong Kong stock exchange on Sunday.

The company also proposed a 0.5 yuan per share dividend for 2017. Bloomberg News said it was the largest such payout by the company since it went public in 2000.

Sinopec largely credited solid demand for fuels stemming from China's continued economic growth for the profit gain.

It said domestic consumption of refined oil products such as petrol, diesel and kerosene grew 6.6 percent compared to 2016, with gasoline demand rising 10.1 percent and kerosene up 11.7 percent.

Chemicals consumption also "grew fast", it said.

"Refining and chemicals are the backbone of Sinopec's assets and those sectors will continue to benefit from China's growing fuel demand," Anna Yu, a Hong Kong-based analyst at ICBC International Research Ltd, told Bloomberg News.

The company also benefited from a policy shift under President Xi Jinping aimed at raising natural gas consumption and lessening reliance on heavily polluting coal, with gas consumption rising 15.3 percent last year.

Last week China's biggest oil producer PetroChina said firmer crude prices contributed to a tripling of its profit in 2017 to 22.8 billion yuan. It also announced it was paying a hefty dividend.

Another Chinese oil giant CNOOC, which specialises in upstream exploration and development of oil and natural gas, announces earnings later this week. Analysts expect these will be up sharply after plunging the previous year on soft crude prices.