Ambani's Reliance missed profit forecast due to higher expenses and oil and gas drag
Mukesh Ambani, the Indian billionaire who owns Reliance Industries, missed its quarterly profit estimates on Friday due to higher expenses and a weak performance in its oil and natural gas segment.
The unit's performance has been affected by lower output and softer prices realized from its KG D6 fields in Andhra Pradesh. These are a major source of gas for the domestic market.
The BP-developed 'deep-water' block, which was once a major contributor to India’s gas production, has since seen its output decline as the reservoirs have matured and the pressures have fallen.
The average realized price for KGD6 in the third quarter was down slightly from a year ago, but prices for coal-bed gas were even lower, which squeezed revenues.
The revenue from the oil and gas segment fell by 8.4% during the quarter ending December 31. Core earnings, however, declined 12.7%. They now stand at 48.57 billion rupies. This is largely because of higher operating costs associated with maintenance activities.
The company's digital unit, Reliance Jio Platforms, has been contemplating an initial public offer this year. Core earnings for the quarter rose 16.4%.
The company's revenue in the oil-to-chemicals division grew by 8.4%, while core earnings increased by 14.6%. Reliance Industries is the largest refinery in the world.
Ambani said that the O2C growth was a result of higher fuel margins and favorable demand-supply dynamics. He also credited 'operational flexibility'.
LSEG data shows that the average analyst's estimate of 196.44 trillion rupees for the third quarter was 186.45 billion.
The total expenses increased by 11.5%, to $27.00 Billion. This was more than the 10.5% rise in revenue of $29.65 Billion. ($1 = 90.7260 Indian rupees) (Reporting by Chandini Monnappa and Nandan Mandayam in Bengaluru; Editing by Mrigank Dhaniwala and Shinjini Ganguli)
(source: Reuters)
