India's Hindustan Petroleum Corp reported a 9% drop in second-quarter profit on Thursday, due to higher tax expenses and a sharp spike in crude prices that squeezed the fuel retailer's margins.
Here are details from the state-run company's earnings report:
Standalone net profit fell to ₹3,483 crore ($367.34 million) in the quarter ended September 30, from ₹3,830 crore last year.
Average global Brent crude prices rose nearly 40% year-on-year in the second quarter, due to a prolonged Iran war and the Russia-Ukraine conflict.
That dragged down marketing margins of oil marketing companies (OMCs) as the cost of supplying fuel exceeded revenue from selling it.
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Analysts at Elara Capital expected retail diesel margins for OMCs to be at negative ₹24 per litre against ₹5 in the year-ago quarter, while gasoline margins were pegged at negative ₹2 per litre against ₹9 last year.
HPCL's overall expenses climbed 25.9% to ₹1.33 trillion, as the cost of raw materials consumed jumped 24.3%.
The company's total tax expenses more than doubled to ₹3,285 crore.
However, the firm's average gross refining margin for April-September improved to $27.89 per barrel from $5.95 per barrel a year ago, aided by gains from lower-cost crude inventories.
A refiner records an inventory gain when the market price of crude oil rises above the price at which the company purchased its crude inventory.
Sale of products rose 26.2% to ₹1.39 trillion, helped by ₹3,960 crore of compensation from the Indian government for domestic LPG under-recoveries during April-September.
HPCL is the first among its peers, such as BPCL and Indian Oil, to report September-quarter results.
($1 = ₹94.8175)
(Reporting by Anuran Sadhu in Bengaluru; Editing by Leroy Leo)