India's Reliance misses profit estimates on weak fuel sales margins
Reliance Industries, India's most valuable company, reported 1Q profit below analysts' estimates on Friday, hurt by lower margins on fuel sales.
The billionaire Mukesh Ambani-led company said its consolidated profit fell to 151.38 billion rupees ($1.81 B) in the April-to-June quarter, from 160.11 billion rupees a year earlier.
Analysts had estimated a profit of 162.87 billion rupees, according to LSEG data.
Oil-to-chemicals earnings before interest, taxes and depreciation fell 14.3% to 130.93 billion rupees from a year earlier, due to lower transportation fuel cracks, particularly gasoline cracks, which were down 30%, Reliance said in a statement.
"The business was impacted by lower fuel cracks with tepid global demand and ramp-up of new refineries," Mukesh Ambani, chairman and managing director, said in a statement.
Advantageous arbitrage crude sourcing was increased to minimize crude basket cost, the company added. Reliance is one of the key Indian buyers of Russian oil sold at a discount and has signed an annual oil purchase deal with Russian oil major Rosneft.
The company's consolidated revenue gained 12% to 2.36 trillion rupees.
The Jamnagar complex, which houses two refining plants with a combined capacity of about 1.4 MMbpd, is at the core of Reliance's oil-to-chemicals (O2C) operations, making it a key profit driver, despite the company's aggressive expansion into retail, telecom and green energy.
Global giants such as ExxonMobil Corp. and bp have also signaled that their earnings would be affected by lower refining margins.
($1 = 83.6740 Indian rupees)
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