Shanghai Petrochemical 2025 Annual Report Analysis: Net Loss Attributable to Parent of 1.4333 Billion Yuan, Operating Cash Flow Plummets by 74.25%

In-Depth Analysis of Core Profitability Indicators

Operating Revenue: Significant Decline in Revenue Scale

In 2025, Shanghai Petrochemical achieved operating revenue of 75.563 billion yuan, down 13.28% year-on-year from 87.133 billion yuan in 2024. Quarterly, revenue showed a clear downward trend: 19.521 billion yuan in Q1, 20.003 billion yuan in Q2, 19.362 billion yuan in Q3, and 16.678 billion yuan in Q4. The Q4 revenue dropped over 20% year-on-year, indicating ongoing pressure on industry demand.

Net Profit Attributable to Shareholders: Turned Losses, Significant Decline

In 2025, the company recorded a net loss of 1.433 billion yuan, compared to a profit of 317 million yuan in 2024, a sharp decrease of 552.64%. Quarterly data shows that, except for a profit of 30.6 million yuan in Q3, the other three quarters were in loss, with Q4 alone losing 1.001 billion yuan, becoming the main drag for the full year.

Net Profit Excluding Non-Recurring Items: Further Widening Losses

The net profit excluding non-recurring items was a loss of 1.422 billion yuan, down 520.78% from a profit of 338 million yuan in 2024. The loss scale is slightly smaller than the net profit attributable to shareholders, mainly because non-recurring gains and losses had limited impact on overall profit.

Earnings Per Share: Turned Negative, Overall Deterioration

Basic earnings per share (EPS) were -0.136 yuan/share, compared to 0.030 yuan/share in 2024, a decline of 553.33%. Non-recurring EPS was -0.135 yuan/share, down from 0.032 yuan/share in 2024, a decrease of 521.88%. All earnings indicators turned negative, reflecting a deep decline in profitability.

Changes in Expense Structure

Total Expenses: Shrinking in Line with Revenue

In 2025, total expenses (selling + management + R&D + financial expenses) amounted to 1.75 billion yuan, down 2.78% from 1.80 billion yuan in 2024. Expenses decreased proportionally with revenue, but the expense ratio (total expenses/revenue) increased from 2.07% in 2024 to 2.32%, indicating increased pressure on cost control.

Selling Expenses: Basically Stable

Selling expenses were 224 million yuan, a slight increase of 0.10% from 224 million yuan in 2024. Despite a significant revenue decline, maintaining stable selling expenses reflects the company’s effort to sustain market share.

Management Expenses: Year-on-Year Decrease

Management expenses totaled 1.476 billion yuan, down 6.80% from 1.584 billion yuan in 2024. The company achieved effective cost control through process optimization and reducing unnecessary expenditures.

Financial Expenses: Slight Narrowing

Financial expenses were -165 million yuan (financial income), compared to -171 million yuan in 2024, a decrease of 3.91%. The reduction was mainly due to interest income dropping from 310 million yuan in 2024 to 205 million yuan in 2025, and interest expenses falling sharply from 115 million yuan to 16 million yuan, leading to a narrower financial income scale.

R&D Expenses: Significant Increase Against the Trend

R&D expenses reached 215 million yuan, up 23.48% from 174 million yuan in 2024. Despite a sharp decline in profits, the company increased R&D investment, mainly in new materials such as carbon fibers and high-end polyolefins, to support future industry upgrades.

R&D Personnel Overview

In 2025, the company had 149 R&D staff, accounting for 2.15% of total employees. In terms of educational background, there were 6 PhDs, 53 master’s degree holders, and 44 undergraduates, with high-education R&D personnel making up 68.46%. Age-wise, 49 R&D staff were aged 50-60 (32.89%), 39 aged 40-50 (26.17%), and younger staff (under 30) numbered 24 (16.11%). The team is experienced overall, but the relatively low proportion of young R&D personnel indicates a need to strengthen recruitment and training of young talent.

Cash Flow Analysis

Operating Cash Flow: Significant Decline

Net cash flow from operating activities was 1.993 billion yuan, a sharp decrease of 74.25% from 7.740 billion yuan in 2024. This was mainly due to cash received from sales dropping from 96.085 billion yuan to 83.167 billion yuan, while cash paid for raw materials and other expenses decreased but not enough to offset revenue decline, leading to a substantial reduction in operating cash flow.

Investing Cash Flow: Reduced Outflows

Net cash flow from investing activities was -1.584 billion yuan, compared to -2.051 billion yuan in 2024, a decrease of 22.76%. This was mainly because the net recovery of fixed-term deposits increased compared to last year, and capital expenditures on fixed assets decreased from 1.906 billion yuan to 3.169 billion yuan (note: original data may contain an error; context suggests expenditure decreased), easing cash outflows from investing activities.

Financing Cash Flow: Significantly Reduced Outflows

Net cash flow from financing activities was -1.105 billion yuan, compared to -2.389 billion yuan in 2024, a decrease of 53.76%. This was mainly due to repayment of short-term borrowings of 1.5 billion yuan, significantly less than 1.970 billion yuan in 2024, and reductions in dividend payments and interest expenses, easing financing cash outflows.

Main Risks Facing the Company

2. Market Price Fluctuation Risk: Large swings in international crude oil and petrochemical product prices will directly impact procurement costs and product prices, significantly affecting profitability. In 2025, although crude oil processing costs decreased, product prices fell more sharply, leading to substantial profit decline.

3. Raw Material Supply Risk: Over 95% of crude oil needed is imported, so supply stability and import cost fluctuations directly impact operations. Geopolitical conflicts and trade policy changes could disrupt supply or increase costs.

4. Environmental Compliance Risk: Stricter environmental policies will require ongoing investments in pollution control and carbon reduction. Failure to meet standards could result in shutdowns, fines, and increased costs, squeezing profit margins.

5. Industry Competition Risk: Overcapacity in the domestic petrochemical industry and intensifying competition in new materials may erode market share if the company cannot continuously improve product competitiveness and optimize industry structure.

6. Exchange Rate Fluctuation Risk: Since crude oil imports and some equipment purchases are foreign currency-denominated, RMB exchange rate fluctuations will directly affect procurement costs. RMB depreciation would increase import costs and erode profits.

Senior Management Compensation

• Chairman Guo Xiaojun: Pre-tax total compensation during the reporting period was 1.2624 million yuan, moderate among core executives, mainly composed of base and performance wages.
• General Manager Lu Zhiyong: Joined in November 2025, with pre-tax compensation of 83,500 yuan during the period, reflecting his short tenure.
• Vice President Du Jun: Pre-tax compensation of 1.2848 million yuan, the highest among senior executives, also serving as CFO, bearing more management responsibilities.
• Vice President Huang Xiangyu: Pre-tax compensation of 1.1574 million yuan, mainly responsible for R&D.
• Other Vice Presidents: Li Shantao earned 1.0621 million yuan, Zhou Guoming 970,900 yuan; their compensation correlates with their respective business responsibilities and performance.

Overall, in 2025, Shanghai Petrochemical faced industry demand weakness and falling product prices, resulting in significant operational losses and turning from profit to loss. Nonetheless, the company continued R&D investments and cost management efforts, while also confronting numerous internal and external risks. Future focus should include industry demand recovery, industrial upgrade progress, and the effectiveness of risk mitigation measures.

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