Profit statements

RIL profits jump on high refining margins

NEW DELHI : Reliance Industries Ltd reported a 46% jump in quarterly profits, helped by strong refining margins, but fell short of analysts’ expectations due to soaring input costs.

Profits from India’s Most Valuable Company Hit 17,955 crore for the three months ended June 30 from 12,273 crore, but missed the average profit estimate of 22,920 crores in a Bloomberg analyst survey.

Operating revenue jumped 55% to reach 2.23 trillion 1.44 trillion. However, total spending jumped 51% for 1.98 trillion, driven by a 76% increase in raw material costs, the company said.

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Fuel growth

All segments of the conglomerate contributed to earnings growth, although a volatile trading environment added to the challenges. Consumer-focused businesses continued to show momentum, with retail benefiting from positive operating levers while Jio (digital services business) benefited from price hikes taken in previous quarters, the company said. In addition, strength in refining boosted the show for the oil-chemicals (O2C) business, as higher production and realizations allowed oil and gas E&P (exploration and production) to see its profits rise. operating more than double compared to the previous year period. “Geopolitical conflicts have caused major disruptions in energy markets and disrupted traditional trade flows. This, combined with the recovery in demand, has resulted in tighter fuel markets and improved product margins. Despite significant challenges posed by tight crude markets and rising energy and freight costs, the O2C business delivered its best performance ever,” said Mukesh Ambani, President and CEO of Reliance. Industries, in a statement.

The June quarter saw an increase in refining margins and Singapore’s benchmark GRM (gross refining margins) improved to $21.4 a barrel, a significant jump from $8 a barrel in the prior quarter, Motilal Oswal Financial Services analysts said. Reliance’s profits rose as exports of refined products from Russia and China fell, demand picked up in the United States and Europe and inventories remained at multi-year lows. RIL is earning a significant premium to the benchmark and as a result, the refining segment likely contributed strongly to earnings despite petrochemical margins improving only modestly. However, the company said downstream chemicals profitability was stable.

Oil & Chemicals segment revenue increased 11% sequentially and 57% from a year ago to 161,715 crores. Segment operating profit outpaced revenue growth, increasing 40% sequentially to 19,888 crores.

Revenue from the E&P activity almost tripled to reach 3,625 crores. Segment operating profit reached 2,737 crore on improved gas price realization and higher production from the KG D6 field.

Retail segment revenue grew 52% year-on-year, while Ebitda nearly doubled.

Ambani said Reliance continues to focus on improving consumer touchpoints and building a stronger value proposition for customers. “Our strong supply chain infrastructure and sourcing efficiency help us maintain competitive prices for basic necessities, thereby protecting consumers from inflationary pressures,” he added.

On Friday, Reliance Retail announced that it has acquired Catwalk, a leading women’s footwear brand, and franchise rights in India for Sunglass Hut, a high-end eyewear retailer. The company has also formed a joint venture with Plastic Legno SPA’s acquiring a stake in India’s toy manufacturing business.

Suneera Tandon contributed to the story.

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