Reliance profit at highest in 7-1/2 years
mumbai/new delhi — Reliance Industries, operator of the world’s biggest oilrefinery complex, reported its highest quarterly profit in seven-and-a-half years as lower crude costs boosted earnings from fuel sales.
First-quarter net income rose 12 per cent to Rs63.2 billion ($987 million), or Rs19.5 a share, in the three months ended June 30 from Rs56.5 billion, or Rs17.5, a year earlier, the Mumbaibased company said on Friday in a stock exchange statement. That beat the Rs62.5 billion median of 16 analyst estimates compiled by Sales fell 32 per cent to Rs658.2 billion as the value of products sold overseas almost halved to $5.1 billion.
Reliance, among a handful of global refiners with the ability to process lowgrade crude into high-value products and switch between fuels depending on market prices, is gaining from crude’s 42 per cent slump in the quarter from a year ago. The company, controlled by billionaire Mukesh Ambani, is investing $12 billion to boost its petrochemicals capacity and build facilities to import ethane from the US, securing low-cost feedstock for polymer resins such as those used to make clothing and containers.
“The company has top class assets,” D.K. Aggarwal, chairman of Mumbaibased brokerage SMC Investments & Advisors, said before the earnings. “With crude oil expected to remain on the lower side, Reliance should continue to show good numbers.”
Reliance shares fell 1.9 per cent to Rs1,025.05 at the close in Mumbai. The benchmark S&P BSE The earnings were announced after trading ended.
During the quarter, $10.40 was earned for every barrel of crude turned into fuels, compared with $8.70 a year earlier and $10.10 in the three months ended March 31, Reliance said in the statement. The refining margin was the highest in six years because of “strong gasoline cracks led by robust demand growth, lower energy cost and favorable crude differentials”, the company said.
Raw material costs fell 40 per cent to Rs489.8 billion, reflecting lower crude prices in the period. —