Sinopec Corp., one of China's three major state-owned oil companies, said Monday its 2011 profit rose just 2 percent despite a double-digit surge in sales as government price controls limited its ability to pass on surging crude costs.
The company, also known as China Petroleum & Chemical Corp., said profit rose to 73.2 billion yuan ($11.8 billion), or 0.84 yuan (13 U.S. cents) per share. Revenues rose 31 percent over the previous year to 2.5 trillion yuan ($404.1 billion).
Beijing has used price controls to try to cushion the impact on China's economy of high global crude costs, forcing Sinopec and other companies to absorb losses. The government has repaid some of those losses in the past with tax rebates or other subsidies.
Sinopec, Asia's biggest refiner by volume, said its refining unit suffered a 35.8 billion yuan ($5.8 billion) operating loss "due to a combination of global crude price surge and continuing price controls on refined oil products in domestic market."
China's growth in demand for refined products and chemicals is likely to ease in 2012 as a rapid economic expansion slows, said Sinopec chairman Fu Chengyu.
Economic growth slowed to 8.9 percent in the final quarter of 2011, down from 10.3 percent for all of 2010. The International Monetary Fund is forecasting 8.2 percent growth this year but says that could fall if Europe, China's biggest trading partner, suffers an unexpectedly severe slowdown.
"The global economy in 2012 continues to face serious challenges, and in light of complex geopolitical tensions, international oil prices are expected to remain high," Fu said in a statement. "With domestic economic growth facing downward pressure, the growth in demand for refining and chemical products is expected to ease."
Sinopec's chemicals unit had a 78 percent increase in operating profit to 26.7 billion yuan ($4.3 billion). Operating profits for exploration and production rose 52 percent to 71.6 billion yuan ($11.5 billion).