CHINA Petroleum and Chemical Corp. (Sinopec Corp.) yesterday reported a 35 percent drop in fourth quarter net profits, bigger than expected, as improved profitability at its refining division was offset by a dip in upstream earnings.

    The oil group, which last month unveiled a plan to sell up to 30 percent of its marketing and distribution business, also said it would cut capital expenditure to 161.6 billion yuan (US$25.96 billion) this year from 168.6 billion yuan in 2013 — which was already 7 percent lower than budget.

    Sinopec attributed the lower capex last year to its efforts to put more emphasis on investment quality and efficiency. Sinopec said it aimed to do more this year to focus on profitability.

    This strategy mirrors the current trend in the global oil industry and echoes plans by rival energy firm PetroChina Co., which said Friday it would cut capital spending for the second consecutive year in 2014 in an effort to boost shareholder returns in the midst of a corruption probe.

    Global oil companies such as Exxon Mobil, Total, BP and Royal Dutch Shell have also said they would cap spending in response to pressure from shareholders, who want more generous payouts.

    Sinopec booked a net profit of 13.8 billion yuan for the quarter, versus 21.1 billion yuan in the fourth quarter of 2012. This compared with a consensus forecast of 20.5 billion yuan from four analysts.

    For the full year, the company earned 66.1 billion yuan, up from 63.9 billion yuan in 2012. The 2013 results lagged the average estimate of 69.2 billion yuan in a poll of 31 analysts.

    Sinopec’s refining division reported an operating profit of 8.6 billion yuan last year against a loss of 11.4 billion yuan in 2012. (SD-Agencies)