IOC Fourth Quarter Profit Dragged By Higher Employee Costs, Refining Margins Improve
Employee benefits jumped almost three-fold leading to a drag in profits for Indian Oil.
Country’s largest refiner Indian Oil Corporation Ltd. (IOC) reported a 6.9 percent quarter-on-quarter fall in net profit during the January-March quarter due to higher expenses arising from the nearly three-fold jump in employee costs.
Net profit fell to Rs 3,720 crore from Rs 3,994 crore on a sequential basis, the company said in a stock exchange filing. It met the consensus estimates of analysts tracked by Bloomberg which stood at Rs 3,714 crore.
Sales grew 5.8 percent to Rs 1,22,285 crore compared to the previous quarter, beating analyst estimates. Earnings before interest, tax, depreciation and amortisation (EBITDA) declined 18.47 percent to Rs 6,468 crore on a quarterly basis. EBITDA margins contracted 158 basis points to 5.28 percent in that period.
The company’s gross refining margin, which is the difference between the crude oil price and the total value of petroleum products produced by the refinery, stood at $7.77 per barrel during the April-March period, compared to $5.06 during the corresponding period in FY16.
The company’s refineries throughput rose 4.33 percent to 17.08 tonnes compared to 16.37 million tonnes sequentially. Pipeline throughput fell 1.92 percent to 19.84 million tonnes, compared to 20.23 million tonnes in the previous quarter.
On the outlook for the current fiscal, the company aims capital expenditure of Rs 20,000 crore, Sanjiv Singh, director-refinery and chairman-designate, IOC, told BloombergQuint.
The oil refiner clocked highest volume of crude in FY17 at 65 million tonnes. “We expect to add this year 6-7 million tonnes to the crude processed last year,” he added.
Other Highlights
- The board has recommended a final dividend of Re 1 per share during the quarter.
- The company accounted for budgetary support of Rs 5,149.21 crore during the April-March period.
- Employee benefits increased almost three-fold to Rs 4,201.99 crore from Rs 1,812.55 crore last year. This included an amount of Rs 2,093 crore which was recognised as 'employee benefit expenses' towards revision of employee pay and allowances which was effective from January 1, 2017.
Shares gained as much as 1.61 percent to Rs 437.5 on the National Stock Exchange.