Sinopec and CNOOC’s annual reports are out: half water, half fire
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Half is seawater, and half is fire. In the past few days, Sinopec and CNOOC have respectively released their 2016 annual reports. Regarding Sinopec, in accordance with International Financial Reporting Standards, in 2016 the company achieved turnover and other operating revenues of RMB 1.93 trillion ； Operating income reached 77.2 billion yuan, an increase of 35.9% on a year-on-year basis. The profit attributable to the company’s shareholders was RMB 46.7 billion, an increase of 43.6% on a year-on-year basis, with a basic earnings per share of RMB 0.385. Over the years of continuous falling oil prices, Sinopec has demonstrated strong profitability despite the adverse conditions, thanks to its advantages in integrated downstream refining and chemical processing. The refining business became Sinopec’s most profitable segment last year. The company achieved operating income of 56.3 billion yuan for the whole year, a substantial increase of 168.5% on a year-on-year basis, delivering its best performance ever and becoming the main driver of the company’s profit growth. Of course, this is also thanks to the policy of setting a floor price for refined oil products… The operating revenue of the chemicals sector amounted to 335.1 billion yuan, an increase of 1.9% on a year-on-year basis. Operating income amounted to RMB 20.6 billion, an increase of RMB 1.1 billion compared with the previous year. In 2016, the sales segment generated operating income of RMB 32.2 billion, a year-on-year increase of 11.4%. In 2016, the upstream segment became Sinopec’s only loss-making area. The annual oil and gas equivalent production was 431.29 million barrels, a decrease of 8.6% compared to the previous year. Upstream’s annual revenue was RMB 115.9 billion, a 16.4% decrease year-on-year. The loss amounted to approximately 36.6 billion yuan, but positive free cash flow was achieved. Some are happy while others are sad. Two days before Sinopec’s annual report was released, CNOOC also published its results for 2016. CNOOC’s annual report shows that it achieved a net profit of 637 million yuan last year, a 97% decline from the previous year, with basic earnings per share amounting to one fen. Looking back three years, CNOOC earned 60.2 billion yuan in 2014, 20.25 billion yuan in 2015, and only 6.37 billion yuan in 2016. Over these three years, due to falling oil prices, CNOOC’s profitability has declined year by year, with its net profit dropping by more than 59.5 billion yuan over the period. Let’s take a look at a few more numbers. In terms of the market, in 2016, CNOOC estimated the oil price at $41.40 per barrel, and the average natural gas price at $5.46 per thousand cubic feet – both figures showing a significant decline compared to the previous year. Oil and gas sales revenue declined by 17.2% year-on-year to 121.3 billion yuan. In terms of cost control, the main cost per barrel of oil equivalent for CNOOC in 2016 was $34.67, a decrease of 12.9% compared to the previous year. To cope with the challenges posed by low oil prices, CNOOC tightened its belt and focused on reducing costs and increasing efficiency; in 2016, the company’s capital expenditures amounted to 49 billion yuan, a decrease of 26.3% compared to the previous year. When the rivers run dry, the small streams also dry up; CNOOC’s situation was even worse in 2016. According to the annual report released by CNOOC Offshore Services, the company’s revenue in 2016 was 15.152 billion yuan, a decrease of 35.9% compared to the previous year ； The net profit attributable to the company’s shareholders was a loss of 11.456 billion yuan, a decrease of 1,166.8% on a year-on-year basis. Also relying on upstream operations and sharing similar challenges to CNOOC is CNPC; although its annual report has not yet been released, the data for the first three quarters of 2016 gives an indication of its situation. In the first three quarters of 2016, China National Petroleum Corporation’s operating revenue was 1,150.4 billion yuan, with a net profit of 17.24 billion yuan; the basic earnings per share was also 1 yuan… Let’s wait for China National Petroleum Corporation’s annual report …
Half is seawater, and half is fire. Some are happy while others are sad.
In 2017, international oil prices might drop below $40 per barrel once again, while domestic oil prices could exceed 8 yuan per liter – who knows?
o(︶︿︶)o Ah, in a few years Sinopec will be the only dominant player; will CNPC and CNOOC no longer exist by then?
When we have no profits, we talk big about energy conservation and emission reduction, as well as reducing staff to increase efficiency. Hehe. . . The State Council has ordered these three giants to reduce their management staff, setting a quota for the number of positions to be cut over the course of a year, but what happens in practice? ? That company reduced its management staff, claiming it was a matter of streamlining the organization. Those who were laid off went to another company, where they didn’t carry out any responsibilities but continued to receive their previous salaries; in other words, they were getting paid without doing any work. Is this also considered a way of reducing the management level? ? ? What’s more, once these orders from the State Council arrive at the companies, they turn into calls to reduce the number of workers on the front line. This applies to the downstream refining and processing departments; although they generated substantial profits last year, they were still required to lay off employees. Of course, it’s not called layoffs now – it’s referred to as voluntary retirement. Women over 45 and men over 55 receive 60% of their previous annual income and go home to retire, while the management fails to follow these rules. The workers on the front line are very resentful; after all, it’s ordinary people who support their families – how can they just be told to go home like that? We all have formal contracts, all of us have signed open-ended contracts; if your management won’t back down, why do you expect us to? ? The company is under great pressure: upper management assigns tasks and demands staff cuts, yet the front-line employees refuse to comply. Hehe. . . In the end, some managers were brought in to take on these tasks, but they’re being rehired. They claim that it would be a waste to let experienced technicians leave; nonsense. In a small factory with less than 900 employees, there are over 200 managers, and yet they’re still being rehired, receiving retirement pay along with another salary – how wonderful! ! ! This is what’s called institutional reform in state-owned enterprises – all those changes end up harming the workers. They talk about workers being the vanguard, and they talk about reducing staff to increase efficiency, but it’s all just nonsense and deceptive tactics. Due to the failure to meet the headcount reduction target last year, although the company’s net profit was 400–500 million, workers’ incomes dropped by more than 6,000 yuan compared to the previous year. The management’s salaries also decreased, but they received larger year-end bonuses as a way to ease the stress of the year. . I have no real business to attend to! ! ! ! You don’t even dare to voice your opinions; these days everyone keeps saying that one must submit to the overall situation, that one should focus on politics and discipline, avoid complaining, learn to be grateful, and know how to give back. Hehe. . . . I have no tears to cry.