RIL posts 4% drop in first quarterly profit on weaker refining margin

Reliance Industries posted a 4% drop in first quarterly profit, hurt by weak refining margins. Profit stood at £1.74 bn in Q1FY25, falling short of analysts’ expectations. Revenue gained 12% to £ 23.6 bn benefiting from the strength of oil-to-chemical (O2C) and oil & gas businesses as well as its fast-growing retail and digital services (Jio) businesses.
Operating profit, a yardstick for underlying business performance, remained nearly flat at £4.09 bn. Expenses climbed 14% to £21.6 bn. Operating profit of O2C declined 14% to £1.30 bn due to subdued global demand in well supplied markets.
“The business was impacted by lower fuel cracks with tepid global demand and ramp-up of new refineries,” said chairman and MD Mukesh Ambani. Fuel cracks refers to cracking or breaking crude oil into different components like jet fuel, gasoline, and kerosene.
Operating profit of digital (Jio) climbed 9% to £1.49 bn due to strong revenue growth. However, Jio’s average revenue per user - a key metric that influences income - was at Rs 182 in Q1FY25, up just 0.6%. ARPU is the total revenue of the telecom operator divided by the number of users on its network. Launched in 2016, Jio has about 490 million customers as of June 30, 2024 and saw data and voice traffic growth of 33% and 6% on its network. The company claimed that Jio is the largest 5G operator outside of China with 130 million subscribers.
Operating profit of the retail business jumped 10% to £567.2 mn, led by growth in consumer electronics, grocery and fashion & lifestyle verticals. Reliance Retail has 18,918 outlets as of June 30, 2024.
Operating profit of oil & gas shot up by 30% to £521 mn on account of higher volumes from the KG D6 Field. “The oil and gas segment continued its growth trajectory with higher production, offsetting lower year-on-year gas price realisations, said Ambani. On its new energy giga factories, Ambani said the company has made significant progress on the implementation of these factories.