The situation in the Middle East has led to unstable crude oil supply. Shanghai Petrochemical: Striving to expand crude oil channels in South America, West Africa, and other regions

Shanghai Petrochemical (338) Chairman Guo Xiaojun stated that the geopolitical situation in the Middle East remains tense, directly affecting the stability of international crude oil supply. The group faces fluctuations in the raw material market and will actively expand crude oil channels in multiple regions such as South America and West Africa to break free from reliance on a single supplier and select high-cost-performance crude oil resources. At the same time, it will continue to promote the technological transformation and upgrading of production facilities to enhance adaptability to different types of oil, along with dynamic management of inventory upper and lower limits to ensure stable production and operation. Shanghai Petrochemical's latest report shows a price of 1.37 yuan, down 1.4%. Executive Director, Deputy General Manager, and Chief Financial Officer Du Jun pointed out that by 2025, the company's crude oil procurement from the Middle East will account for 66%, an increase of 11.5 percentage points year-on-year. Currently, crude oil inventory is at a reasonably low level, which can effectively resist market risks. Turned from Profit to Loss of 1.612 Billion Last Year Shanghai Petrochemical achieved an operating income of 75.513 billion yuan (RMB, the same below) in 2025, a year-on-year decrease of 13.26%; the annual loss was 1.612 billion yuan, turning from a net profit of 311 million yuan in the previous year to a loss, with a loss per share of 15.3 cents. The board of directors decided not to distribute a final dividend this year. The company explained that the performance turned from profit to loss mainly due to major maintenance of refining facilities during the year, leading to a decline in refining product output, compounded by the overall weak prosperity of the petrochemical industry and continuous pressure on market prices. During the period, the tax-excluded weighted average price of refining and chemical products fell by 8.31% and 13.36% year-on-year, respectively; the total crude oil processed throughout the year was 12.6125 million tons, a year-on-year decrease of 5.49%, with crude oil processing costs at 3,872.30 yuan/ton, down 9.57% year-on-year. Du Jun clarified the company's dividend principles, stating that the group commits to a dividend payout ratio of no less than 30% of the annual net profit, provided that profits are achieved. In the future, the company will flexibly utilize various financing methods based on actual operating conditions and project investment plans to control financing costs, reasonably reduce debt levels, and balance business development with long-term shareholder returns. Implementing Comprehensive Cost Reduction and Efficiency Improvement In the face of operational pressures in the industry, Du Jun stated that the company is implementing comprehensive cost reduction and efficiency improvement measures, aiming for variable costs and non-productive expenditures to decrease by more than 3% year-on-year. The company will continue to optimize the crude oil procurement structure, promote quality upgrades of facilities, strictly control various operating costs, adhere to the concept that "all costs are controllable," and implement zero-based budgeting and industry benchmarking management. In addition, the company indicated that the current pricing mechanism for refined oil products does not account for fluctuations in transportation and storage fees, resulting in significant operational pressure, and has reported the situation to relevant departments. Guo Xiaojun stated that the company will invest 19.6 billion yuan in the "14th Five-Year Plan" to construct a 1.2 million-ton ethylene project, insisting on transforming from oil to chemicals, developing high-end chemical new materials, and building a modern petrochemical and new materials industrial base