Reliance Industries (RIL)’s net profit rose 0.2% on-year to Rs 5,510 crore ($894 million), or Rs 17.10/share, in the December quarter, higher than market estimates of Rs 5,315 crore, following slight improvement in the refining business.
RIL had been struggling due to steady decline in its exploration and production business, but now might see good times ahead following expansion of its petrochemical capacity, steady improvement in retail operations and likely turnaround in oil and gas production.
Alok Agarwal, CFO of RIL, said that petrochemical expansion, especially the polyester capacity at Silvassa, would complete in the fourth quarter of this fiscal; and gas production would also be higher going forward, following production of new well MA8 in January.
Despite weaker oil price, RIL’s refining business maintained stable margins as it was positively impacted by widening crude differentials, strength in middle distillates and naptha cracks.
Gross refining margins (GRM) were stable sequentially but down from a year ago to $7.6 per barrel, which were better than benchmark Singapore GRM of $4.3/bbl.
Agarwal said that due to improvement in refinery utilisation across the world, Singapore GRM had improved to $6.2/bbl in the first 15 days of the current quarter, suggesting likelihood of improvement in its own GRM.
RIL’s revenue was flat sequentially but improved by 10.5% from a year ago to Rs 1,06,383 crore. The cash cow, petrochemicals, reported EBIT of Rs 2,124 crore, down 15.2% sequentially but up 9.7% from a year ago.
Agarwal said for this segment, December is seasonally weak as there is poor domestic demand for polymers and polyester. Sequential decline in regional deltas for key products – PP, PVC and fibre intermediates – also impacted the numbers.
RIL’s shale gas business in the US continued strong growth with gross production of 43 Bcfe, a growth of 33% on-year and 18% sequentially.
The company’s retail business turned profitable for the first time at net level in the December quarter, Agarwal said, but did not disclose the numbers.
Retail turnover grew 38% on-year to Rs 3,927 crore from Rs 2,839 crore. Retail expanded its presence across various formats by opening more than one store a day. As on December 31, 2013, Reliance Retail operated 1,577 stores across 141 cities.