China Petroleum and Chemical Corporation(Sinopec) reported Sunday a year-on-year drop of 47.3 percent in its net profit in 2008, which was expected to rise more than 50 percent year on year in the first quarter this year.

Net profit totaled 29.769 billion yuan (US$4.36 billion) in 2008 with earnings per share fell by 0.309 yuan to 0.343 yuan, due to fuel price caps, windfall taxes and decreased demand in the fourth quarter last year, the company said in a statement to the Shanghai and Hong Kong stock markets.

Total turnover reached 1.42 trillion yuan, representing an increase of 21 percent from the previous year.

Earnings before interest and tax tumbled 67.2 percent to 28.1 billion yuan last year, as the oil refining business bore huge losses, the company said.

According to Sinopec, the company received a subsidy of 50.3 billion yuan from the government in 2008 for its losses in oil refining which had suffered dramatic price turbulence and market contraction since the second half last year.

The company's income was also affected by a windfall tax when crude oil rose above 40 U.S. dollars per barrel. With global crude oil price soaring above 147 U.S. dollars in mid-July last year and stayed above 40 U.S. dollars all year round, such tax cost Sinopec nearly 33 billion yuan in 2008, 21.6 billion yuan more than that in 2007.

As the largest oil refinery of China, Sinopec has over 70 percent crude oil it refined imported overseas.

At the same time, the company predicted its net profit for the first quarter in 2009 would increase by more than 50 percent year on year because of lower international crude oil price and adjusted refined oil prices in the domestic market.

Sinopec's net profit for the first quarter of 2008 was 6.701 billion yuan, with earnings per share of 0.077 yuan.

Oil market would face great changes in 2009 as the impact of the global financial crisis on the real economy would further deepen, the company said.

Sinopec predicted the international oil prices would fluctuate at a lower level with increase in demand slowed down.

However, as the government launched the new pricing mechanism for refined products in 2009, which ensured profits of oil refiner, Sinopec expected its oil refining business as a major source of income and profit rise in 2009.

New opportunities would also come on the way with governmental support plan for the oil industry to stimulate economy, the company said.

Listed in Hong Kong, New York, London and Shanghai, Sinopec is the listed subsidiary of China Petrochemical Corporation (Sinopec Group).

(Xinhua News Agency March 30, 2009)