Record Re­fin­ing Mar­gins Pump RIL Profit Up 12.5% Rev­enues rise 24% on higher prices and vol­umes in re­fin­ing and petchem

The Economic Times - - Front Page - Our Bu­reau

Re­liance In­dus­tries’ quar­terly net profit rose 12.5% year on year as its boom­ing re­fin­ing and petro­chem­i­cals busi­nesses re­ported higher sales at decade-high mar­gins, which out­weighed heavy in­ter­est and de­pre­ci­a­tion charges in its earn­ings that con­sol­i­dated the re­sults of tele­com ven­ture Jio for the first time.

Net profit for the Septem­ber quar­ter rose to .₹ 8,109 crore while reve- nues in­creased 24% to .₹ 1.01 lakh crore com­pared with the cor­re­spond­ing pe­riod a year ago. Net profit was 11% lower than that in the June quar­ter which in­cluded a one-time gain of .₹ 1,087 crore from the sale of its stake in Gulf Africa Petroleum Corp.

RIL’s Jam­na­gar re­fin­ery earned $12 for each bar­rel of crude oil it pro­cessed, the high­est in nine years, and $3.7 more than its Sin­ga­pore peers. With global de­mand lik- ely to grow faster than new fuel sup­ply, mar­gins are likely to re­main strong, the com­pany said.

In the re­tail, re­fin­ing and petro­chem­i­cals busi­nesses, higher prices and vol­umes con­trib­uted to the strong growth in rev­enues, the com­pany said. Rev­enues of its re­tail seg­ment rose 81% to .₹ 14,646 crore while its earn­ings be­fore in­ter­est and tax (EBIT) more than dou­bled to .₹ 334 crore. The seg­ment re­ported an EBIT mar­gin of 2.3%.

The mar­gin for its re­fin­ing and mar­ket­ing busi­ness was much higher at 9.5%. This seg­ment clocked a turnover of ₹ 69,766 crore and an op­er­at­ing profit of ₹ 6,621 crore.

Re­liance hopes to fur­ther in­crease its re­turn on cap­i­tal as it starts gain­ing from the heavy cap­i­tal ex­pen­di­ture — mainly in its dig­i­tal, petro­chem­i­cals and re­fin­ing ventures — which is get­ting com­pleted.

“The ben­e­fits of op­ti­mis­ing our busi­ness through new projects are be­gin­ning to emerge. The struc­tural strength in en­ergy and ma­te­ri­als busi­ness en­vi­ron­ment au­gurs well for our new ca­pac­i­ties which are com­ing on-line this year,” chair­man Mukesh Am­bani said.

The petro­chem­i­cals busi­ness, which has re­ported very strong num­bers in re­cent quar­ters, be­came even more prof­itable dur­ing the quar­ter. The seg­ment’s EBIT jumped 45.2% to a record ₹ 4,960 crore while rev­enue was 25% higher at ₹ 26,999 crore com­pared with a year ago. The op­er­at­ing mar­gin climbed to a decade-high of 17.7% from 15.2%.

Re­liance Jio re­ported a profit be­fore in­ter­est and taxes of ₹ 261 crore, while EBITDA, which also ex­cludes de­pre­ci­a­tion and amor­ti­sa­tion, was much higher at ₹ 1,443 crore. Ahead of the earn­ings on Fri­day, shares of the com­pany hit a 52-week high of ₹ 891 on the BSE be­fore clos­ing at ₹ 876.70, gain­ing 0.5%.

De­pre­ci­a­tion rose to ₹ 4,287 crore from ₹ 2,774 crore in the same quar­ter last year. “The in­crease was mainly on ac­count of com­mence­ment of com­mer­cial op­er­a­tions of Jio’s Wire­less Telecom­mu­ni­ca­tion Net­work,” the com­pany said.

RIL’s fi­nance cost rose to ₹ 2,272 crore from ₹ 883 crore over the same pe­riod “pri­mar­ily on ac­count of fi­nance cost re­lated to dig­i­tal ser­vices busi­ness”, it said.

Its debt as on Septem­ber 30 rose to ₹ 2.14 lakh crore from ₹ 1.96 lakh crore on March 31, 2017. Cash and cash equiv­a­lents were ₹ 77,014 crore against ₹ 77,226 crore at the end of March. The com­pany’s US shale busi­ness, where it re­cently sold its stake in a ven­ture, con­tin­ued to be slug­gish as lower prices and vol­ume af­fected per­for­mance. The do­mes­tic oil and gas ex­plo­ration, and pro­duc­tion busi­ness re­ported an 8.4% in­crease in rev­enue be­cause of coal bed meth­ane pro­duc­tion although its out­put from KG Basin fields con­tin­ued to de­cline. How­ever, the com­pany is at an ad­vanced stage of ne­go­ti­a­tions and eval­u­at­ing bids for the project to de­velop new fields in the block.

On a stand­alone ba­sis, the com­pany re­ported stand­alone net profit of ₹ 8,265 crore and rev­enues of ₹ 75,165 crore.


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