Sinopec's performance declines for three consecutive years; advancing transformation and strategic investment in CATL yields a profit of 3.1 billion yuan

Changjiang Business Daily Reporter Shen Yourong

International crude oil prices fluctuate, putting pressure on profit growth for China Petroleum & Chemical Corporation (Sinopec) (600028.SH), one of the “Big Three Oil” companies.

On the evening of March 22, Sinopec disclosed its annual report for 2025. The company achieved operating revenue of 2.78 trillion yuan, a year-on-year decrease of 9.46%; net profit attributable to shareholders was approximately 31.8 billion yuan, a year-on-year decrease of nearly 37%.

This marks the third consecutive year of declining performance for Sinopec, and the company’s net profit attributable to shareholders has declined for four consecutive years.

In response to the decline in performance for 2025, Sinopec explained that the significant drop in international crude oil prices and weak margins in the chemical market have greatly impacted the company’s performance compared to the previous year.

Sinopec Chairman Hou Qijun stated in the financial report that the company’s cash flow from operating activities is abundant, and its financial condition remains stable.

Changjiang Business Daily reporters found that in 2025, Sinopec, as a cornerstone investor, strategically invested in the H-share issuance of CATL. By the end of 2025, this investment had generated an unrealized profit of approximately 3.1 billion yuan.

Sinopec is actively undergoing industrial transformation and upgrading, having established the company’s first 40 million-ton refining base and built more than 13,000 battery swapping stations.

In 2025, Sinopec’s R&D investment reached 15.863 billion yuan, supporting the company’s innovation-driven initiatives.

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Net profit attributable to shareholders declines while stock price experiences roller coaster ride within the year

Sinopec’s operating performance has declined again.

According to the latest disclosed annual report, in 2025, Sinopec achieved operating revenue of approximately 2.78 trillion yuan, a year-on-year decrease of 9.46%; net profit attributable to shareholders was 31.809 billion yuan, a year-on-year decrease of 36.78%; and net profit after deducting non-recurring gains and losses was 29.529 billion yuan, a year-on-year decrease of 38.60%.

This is the fourth consecutive year of decline in net profit attributable to shareholders for Sinopec. In 2021, the company achieved operating revenue and net profit attributable to shareholders of 2.74 trillion yuan and 71.208 billion yuan, respectively, with year-on-year growth of 30.23% and 114.02%. Following that, from 2022 to 2024, the operating revenue was 3.32 trillion yuan, 3.21 trillion yuan, and 3.07 trillion yuan, with year-on-year changes of 21.06%, -3.19%, and -4.29%; net profit attributable to shareholders was 67.082 billion yuan, 60.463 billion yuan, and 50.313 billion yuan, with year-on-year declines of 5.79%, 9.87%, and 16.79%.

In response to the further decline in performance for 2025, Sinopec explained in its annual report that in 2025, faced with profoundly complex global changes and increasingly fierce market competition, the company overcame difficulties, and various aspects made new progress and achievements. However, due to significant drops in international crude oil prices and weak margins in the chemical market, the company’s performance declined significantly compared to the previous year.

In 2025, international crude oil prices fluctuated downward. The average annual spot price for Brent crude oil was $69.1 per barrel, a year-on-year decrease of 14.5%. Domestic natural gas demand continued to grow, with annual domestic natural gas consumption increasing by 2.9% year-on-year.

In terms of refined oil markets, in 2025, domestic demand for refined oil decreased. Domestic refined oil consumption (including gasoline, diesel, and kerosene) decreased by 4.1% year-on-year. Among them, gasoline decreased by 4.5% year-on-year, diesel decreased by 5.6%, and kerosene increased by 4.4% year-on-year.

In response to market changes, Sinopec focused on improving quality and efficiency, made every effort to expand the market and increase sales, dynamically optimized production and operational arrangements, and strictly controlled costs and expenses, taking multiple measures to cope with adverse market impacts.

In 2025, Sinopec’s operating expenses were approximately 2.7 trillion yuan, a year-on-year decrease of 9%. Among them, sales, general and administrative expenses were 57.2 billion yuan, a year-on-year decrease of 0.6%. This was mainly due to the company’s increased control over non-production expenditures, leading to a reduction in marketing and management expenses. However, the company’s exploration expenses were 11.4 billion yuan, a year-on-year increase of 21.1%. The company continued to increase exploration efforts for shale oil, ultra-deep oil and gas, and other resources.

In the secondary market, since the beginning of the year, Sinopec’s stock price has experienced a roller coaster.

Dividends and buybacks account for 81% of net profit attributable to shareholders

Although Sinopec’s operating performance has fluctuated, the company continues to actively promote industrial upgrades and innovative development according to its established strategy.

In 2025, Sinopec placed greater emphasis on innovation-driven growth, promoting the transformation of scientific and technological achievements into productive forces, supporting the development of advantageous and emerging industries, and maintaining a leading position in patent quality among Chinese enterprises. The company has achieved positive results in major scientific and technological projects related to new oil and gas exploration and development, new materials, and accelerated the promotion and application of RTC catalytic cracking technology, with new material products such as polyolefin elastomers, liquid rubber, and high-performance carbon fiber being accelerated to market. The company has implemented the “Artificial Intelligence+” action, promoting the application of large models and cultivation of smart factories, accelerating digital empowerment.

Sinopec’s R&D investment has continued to increase. In 2025, the company’s R&D investment was 15.863 billion yuan, compared to 11.481 billion yuan, 12.773 billion yuan, 13.969 billion yuan, and 15.215 billion yuan from 2021 to 2024.

Sinopec is accumulating momentum for transformation and upgrading. In 2025, the company is anchored in high-end, intelligent, and green development directions, having established the company’s first 40 million-ton refining base. Projects for transformation and upgrading and quality improvement, such as Maoming ethylene and Jiujiang aromatics, are being implemented in an orderly manner. The company is striving to become a comprehensive energy service provider, maintaining the largest share in hydrogen refueling in China, having established more than 13,000 battery swapping stations, accelerating the large-scale development of green electricity business, achieving integrated carbon trading, and building a new service paradigm for “vehicle ecology” and “home life.”

In the construction of battery swapping stations, Sinopec collaborates with CATL. In April 2025, Sinopec and CATL signed an industrial and capital cooperation framework agreement, fully deepening their long-term strategic partnership, using “industrial cooperation + capital cooperation” to jointly build a national battery swapping network ecosystem and standard construction, with unified management and operation of battery swapping assets.

Sinopec has also established equity binding with CATL. In 2025, CATL went public in Hong Kong, and as a cornerstone investor, Sinopec invested $500 million (approximately 3.6 billion yuan) to participate in the subscription.

This investment has brought substantial returns to Sinopec. According to the annual report, by the end of 2025, the company’s other equity instrument investments were mainly in CATL’s equity, with a book value of 6.71 billion yuan, compared to an investment of 3.6 billion yuan, resulting in an unrealized profit of approximately 3.1 billion yuan.

In 2025, despite the decline in performance, Sinopec’s net cash flow from operations was 162.496 billion yuan, a year-on-year increase of 8.79%.

Based on this, Sinopec actively rewards shareholders and investors. According to the 2025 annual profit distribution plan, the company plans to distribute cash dividends of 13.544 billion yuan (including tax), along with the mid-year dividend for 2025, bringing the total annual dividend distribution to 24.206 billion yuan, accounting for 76.10% of the year’s net profit attributable to shareholders. If the amount spent on repurchasing A-shares and H-shares is included, the company’s annual dividend payout ratio will reach 81%.