Indian Oil Corp swings to Q1 profit on higher marketing margins

Indian Oil Corp Ltd (IOC) reported a first-quarter profit on Friday, as the country's top refiner benefited from higher fuel sales and marketing margins.

The state-owned company's net profit was Rs 13,750 crore ($1.67 billion) for the quarter ended June 30, compared with a loss of Rs 1,993 crore, a year earlier.

IOC said its domestic product sales rose 1.4 per cent to 23.31 million metric tonnes (MMT), while exports fell 34.2 per cent to 1.10 MMT.

Revenue from operations fell 12.2 per cent to Rs 2.21 lakh crore.

The company said its gross refining margin, or profit from converting a barrel of oil into refined products, was $8.34 per barrel in the first quarter, compared with $31.81 per barrel a year earlier.

Indian fuel retailers had sold fuel at a loss last year, but have recovered some of the losses during this quarter due to higher marketing margins, analysts said.

India's fuel demand slipped in June due to monsoon rains, after soaring in May when diesel sales scaled a record high on strong factory activity.

While companies have not revised up pump prices for months, a near 50 per cent fall in crude prices from last year's highs has helped refiners, analysts said.

Fellow state-run refiner Bharat Petroleum Corp on Wednesday also swung to profit from a loss, a year ago, primarily due to higher marketing margins.

Indian refiners have also been buying cheaper Russian crude.

Indian Oil, along with its unit Chennai Petroleum, controls about a third of India's five million-barrels-per-day refining capacity.

($1 = Rs 82.25)