RIL beats estimate

Strong operating performance from refining business and stable petrochemicals business lead to higher operating profits.

April 17, 2015 11:19 pm | Updated 11:19 pm IST

Beating analysts’ expectations, Reliance Industries Ltd. (RIL), bolstered by better performance of its refining business, on Friday, reported a 8.5 per cent growth in its net profit at Rs.6,381 crore for the fourth quarter ended March 31, 2015, against Rs.5,881 crore in the corresponding period last year.

Due to an increase in the refining margin, the company managed to offset the setback in its exploration business.

For the fourth quarter, RIL reported a sharp 33.3 per cent drop in its turnover at Rs.70,863 crore against Rs.1,06,208 crore in the same period last year. Sharp fall in year-on-year benchmark oil price of around 50 per cent was the key factor for the decline in revenue, the company said.

“FY 2014-15 has been a very successful and important year for Reliance. In a time when the collapse of crude oil prices unsettled the hydrocarbons markets, our refining business delivered record earnings,” Mukesh D. Ambani, Chairman and Managing Director, RIL said in a statement.

“The earnings power demonstrated by our hydrocarbon businesses in this environment validates our philosophy of investing in world-scale, cost competitive assets, cutting-edge technology and the talent of people,” Mr. Ambani said.

“This year we also made giant strides in our quest to sustain Reliance’s growth momentum with the highest-ever capital investment into our hydrocarbon business and our next-generation digital services initiative. Our organised retail business maintained its high growth trajectory with a wider pan-India footprint. Particularly gratifying, we achieved this, while maintaining our track-record of adhering to highest standards of safety and operational excellence,” he added.

On a consolidated basis, the company reported a 13 per cent drop in its turnover at Rs.3,88,494 crore for the year ended March 31, 2015, against Rs.446,339 crore in the previous year. The decline in turnover was due to sharp fall in crude oil prices during the second half of the year. Crude oil price averaged at $ 85.4/bbl in 2014-15, a fall of 21 per cent on year-on-year basis.

Net profit was higher by 4.8 per cent at Rs.23,566 crore against Rs.22,493 crore.

“The results are better than expected. It shows a clear turnaround across verticals,” said Ambareesh Baliga, Stock Analyst.

RIL’s gross refining margins (GRM) for the year stood at $8.6/bbl against $8.1/bbl in the previous year. During FY15, the benchmark Singapore complex margin averaged $ 6.3/bbl as compared to $ 5.9/bbl in FY14.

For the fourth quarter, the GRM was $10.1/bbl as compared to $7.3/bbl in the previous quarter and $9.3/bbl in the same period last year.

In the domestic exploration business, the fourth quarter revenues and EBIT were down by 9.2 per cent and 38.6 per cent respectively on a quarter-to-quarter basis, due to lower average oil prices and lower gas production from KG-D6 and Tapti fields.

KG-D6 field produced 1.96 million barrels of crude oil, 0.32 million barrels of condensate and 158 BCF of natural gas in 2014-15, a growth of 12 per cent in case of Condensate and a reduction of 3 per cent and 12 per cent of Crude oil and Natural Gas respectively on a year-on-year basis. “The decline in production was largely due to natural decline in the fields coupled with partial shutdown of MA field due to HUDUD cyclone,” RIL said.

RIL’s Shale Gas business continued to witness macro headwinds, with sequential softening of commodity prices, it said.

For the year, Reliance Retail delivered strong performance in revenue and profits growth. Total revenue grew by 21.2 per cent to Rs.17,640 crore and achieved record PBDIT of Rs.784 crore for the year.

1 Turnover down 13 per cent to Rs.3,88,494 crore in 2014-15 from Rs.4,46,339 crore.
2 Net profit up 4.8 per cent to Rs.23,566 crore from Rs.22,493 crore.
3 Gross refining margin was up at $10.1 per barrel in Q4 against $7.3 in Q3.
4 Drop in turnover was due to sharp fall in crude oil prices in second-half
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