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Reliance profit slides as pandemic slams oil business

BENGALURU/NEW DELHI (Reuters) - Reliance Industries Ltd posted a 15% drop in September-quarter profit on Friday as the coronavirus crisis hammered its oil business, although the Indian conglomerate reaped double-digit revenue growth at its Jio telecom service.

Mukesh Ambani, Chairman and Managing Director of Reliance Industries, arrives to address the company's annual general meeting in Mumbai, July 5, 2018. REUTERS/Francis Mascarenhas/Files

Reliance, led by Asia’s richest man Mukesh Ambani, has in recent years built massive retail and telecom businesses to tap into India’s consumer boom and reduce its dependence on the energy sector.

Reliance, which operates the world’s biggest refining complex, said consolidated profit slipped to 95.67 billion rupees ($1.29 billion) in the three months to Sept. 30, although it came in comfortably above analysts’ average estimate of 85.48 billion rupees, Refinitiv data showed.

Still, its energy business was hurt by a collapse in global oil demand as the COVID-19 pandemic disrupts travel and business. Sales of refined products such as gasoline, diesel and jet fuel have been hit, although demand within India has been picking up.

“Domestic demand has sharply recovered across our (oil-to-chemicals) business and is now near pre-Covid level for most products,” Reliance Chairman Ambani said in a statement.

Reliance’s gross refining margin - the profit earned on each barrel of crude oil processed - slumped to $5.7 per barrel. Refining and petrochemicals revenue plunged 36% and 23%, respectively.

The demand-supply balance in the oil-to-chemicals sector should normalise in two to three quarters, leading to a recovery in margins, Reliance Joint Chief Financial Officer V. Srikanth said on a conference call with reporters.

Its Jio telecom unit remained a bright spot as revenue jumped 33% and the number of subscribers surpassed 400 million.

Reliance’s retail division suffered a 4.9% drop in revenue as the health crisis kept shoppers away. Still, the decline was less worse than the June-quarter’s 17% fall.

Overall revenue for operations slid 24% to 1.16 trillion rupees.

Reporting by Sachin Ravikumar in Bengaluru and Nidhi Verma in New Delhi; Editing by Anil D’Silva