Reliance Industries Q1 turnover down 23%, profit up 4.4%

The standalone net profit stood at Rs 6,318 crore in the April-June quarter, up from Rs 5,649 crore in the year-ago period, on six-year high refining margins and strong petrochemicals earnings. The profits in the first quarter of the current fiscal beat the street estimates and were at their highest level in more than six years. Reliance Industries Ltd (RIL), the operator of world’s largest refining complex that can process low-grade crude and switch between fuels depending on market prices, earned $10.4 on turning every barrel of crude into petroleum product.

This was the highest gross refining margin it has earned in six years as compared to $10.1 per barrel margin in preceding January-March quarter and $8.7 of Q1 of 2014-15 fiscal. The company, which is investing $12 billion to boost petrochemical capacity and refinery processes as well as build facilities to import ethane from the USA, said that a 23 per cent dip in its turnover to Rs 83,064 crore was mostly because of 43.5 per cent dip in oil prices.

Before the earning announcement, Reliance Industries Ltd shares fell 1.9 <g data-gr-id="55">per cent</g> to close at Rs 1,025.05 on the Bombay Stock Exchange. Consolidated net profit rose 4.4 per cent to Rs 6,222 crore in April-June quarter of the current fiscal as opposed to Rs 5,957 crore a year ago, the statement said.

Reliance Retail, the retail arm of Reliance Industries, reported a nearly 19 <g data-gr-id="53">per cent</g> increase in its pre-tax profit at Rs 203 crore for the first quarter ended June 30, 2015. It had reported <g data-gr-id="54">PBDIT</g> (profit before depreciation and income tax) at Rs 171 crore in the corresponding period of the previous year.

Reliance Retail’s turnover in the quarter under review went up by 17.5 per cent at Rs 4,698 crore as against a turnover of Rs 3,999 crore in the first quarter of 2014-15.  “Reliance Retail recorded continued growth momentum and strong profitability in the first quarter of the current financial year...Value Formats consolidated their leadership position further of being the largest grocery retailer in the country,” the company said. Reliance Retail now operates 2,747 stores across 210 cities in India.

Reliance Industries Ltd Chairman Mukesh Ambani said the company’s financial performance reflects the benefits of integrated hydrocarbon chain activities in a benign oil price environment. 

“The sharp increase in demand for transportation fuels helped us realise strong refining margins,” he said. 

Oil product demand globally is estimated to have grown at about 1.6 million barrels per day, resulting in high refinery runs across all regions. “Our petrochemicals business recorded a strong quarterly performance supported by high operating rates and margin strength in the ethylene chain,” he said. Going forward, Reliance Industries Ltd is committed to accelerating the growth of operating profit before depreciation and income tax, he said.

While <g data-gr-id="69">pre-tax</g> profit from refinery business jumped 37.7 per cent to Rs 5,252 crore, earnings from petrochemical business soared 25.5 per cent to Rs 2,338 crore. EBIT from oil and gas production <g data-gr-id="68">business however</g> dropped 97 per cent to Rs 32 crore. “We are leveraging the strength of our integrated value chains to deliver sustainable growth. Large investments in our petrochemicals and refining businesses are based on advantaged feedstocks to enable us to stay among low-cost, competitive producers in an evolving hydrocarbon chain environment.

“We maintained rapid progress in project construction activity at Jamnagar. The company’s world-scale <g data-gr-id="60">petcoke</g> gasification project and ethylene cracker are on track for planned start-up in 2016. We are also in the final lap of <g data-gr-id="77">launch</g> of our <g data-gr-id="61">Jio</g> services which will bring about a positive transformation in the lives of millions of Indians,” Ambani said. Other income fell to Rs 1,832 crore in April-June from Rs 1,974 crore. Depreciation of Indian rupee led to <g data-gr-id="75">increase</g> cost jumping to Rs 902 crore as against Rs 505 crore in Q1 of previous fiscal. RIL’s outstanding debt was higher at Rs 170,814 crore as on June 30, <g data-gr-id="74">2015</g> when compared to Rs 160,860 crore as on March 31, 2015. It had a cash balance of Rs 87,391 crore.

Lower oil prices meant earnings from refinery business fell 30 per cent to Rs 68,729 <g data-gr-id="65">crore</g> but segment pre-tax profit was up 37.7 per cent at Rs 5,252 crore. During the quarter, RIL’s Jamnagar refineries processed 16.6 million tonnes, which translates into 107 <g data-gr-id="50">per cent</g> of the installed capacity.

Singapore refining margin in the first quarter was $8 per barrel. Petrochemical business revenue was down 18 per cent at Rs 20,858 <g data-gr-id="71">crore</g> but segment pre-tax profit was up 25.5 per cent to Rs 2,338 crore, primarily on account of increase in prices. US shale gas revenue fell 47.2 per cent to Rs 854 crore and the company posted a pre-tax loss of Rs 49 crore.

Reliance Jio, RIL’s soon-to-be-launched telecom and content business, may sell its own branded 4G-enabled handsets when it commercially starts operations by December “We are in discussions with all the leading handset makers for RelJio launch. Already, our retail arm ReConnect sells over 100 electronic products, including mobile handsets now.,” Reliance Industries Joint CFO Srikanth Venkatachari told reporters here.