Profits at top Asian oil refiner Sinopec nearly halved in 2008 because of caps on how much it could sell fuel for, even as oil prices soared.
Annual net profit fell 47% to 13.3bn yuan ($1.94bn; £1.35bn) from 56.5bn yuan in the same period a year earlier.
It marked the first profit decline at the state-run firm in seven years.
The loss came as the company was obliged to supply fuel at low prices set by the government, even when prices reached a record $147 a barrel.
But analysts expect margins to improve in 2009 as price caps ease and oil prices remain far below the record reached in 2008.
The firm predicts its net profit for the first three months of this year will rise by half compared to the same quarter a year earlier.
But it also warned that demand would slow further.
"The demand growth for refined oil products in the domestic market is expected to slow down," the company said.
"Due to the combined pressure of slower economic growth and a downward cyclical trend, the chemicals business will be facing more challenging situations."
While the firm saw its profits fall sharply in 2008, the government provided annual subsidies worth 50.3bn yuan.
Other firms in the sector have also been hit, with PetroChina recently saying its net profit in 2008 fell 22%.
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