Reliance Industries posts 17% increase in consolidated Q2 net profit

The consolidated net profit of Reliance Industries Ltd. (RIL) rose 17.4 per cent in the July-September quarter to Rs. 9,516-crore from a year ago as revenue from operations jumped 54.5 per cent to Rs. 1,56,291-crore. The consolidated net profit was Rs. 8,109-crore on revenue of Rs. 1,01,169-crore in the second quarter of FY18.

Reliance Jio Infocomm (RJio), a wholly-owned subsidiary of RIL, posted a net profit of Rs. 681-crore for the quarter under review, making its fourth consecutive quarter of profits.

The oil-to telecom conglomerate said the quarterly consolidated net profit was also boosted by higher price realisations from refinery and petrochemical products.

The gross refining margins – what a refiner earns by turning a barrel of crude oil into refined products – fell to $9.5 per barrel from $12 a year ago due to higher crude prices and shut down of the Fluid Catalytic Cracking Unit (FCC). The lower refining margins dragged down the EBIT in the refining and marketing business by 19.6 per cent to Rs. 5,322-crore. The crude throughput dropped to 17.7 million tonnes (mt) from 18.1-mt a year ago.

The petrochemicals business posted a 56.2 per cent rise in revenue to Rs. 43,745-crore from Rs. 27,999-crore in the second quarter of FY18 on the back of higher volumes and price realisations. The throughput in petrochemicals rose to 9.4-mt from 7.9-mt a year earlier.

“Our integrated refining and petrochemicals business generated strong cash flows in a period of heightened volatility in commodity and currency markets,” RIL’s Chairman and Managing Director Mr. Mukesh Ambani said in a statement.

RIL also announced its entry into mass rapid transport systems with the acquisition of 12.7 per cent stake in SkyTran Inc for an undisclosed amount. SkyTran is a US incorporated venture-funded technology company developing state-of-the-art technology in the field of personal rapid transit systems.

Lower profit and high crude prices

Meanwhile, in a presentation to analysts after releasing the quarterly results, RIL said crude oil prices would remain high in the near term, while petrol supply would increase globally. This would reduce the profit a refiner makes from producing fuel, it added.

However, medium-term refining margins will be supported by the global growth in demand and much tougher emission norms for the shipping industry that come into force from 2020, the conglomerate said.

It said the business faced headwinds from the US-China trade tensions, currency depreciation in emerging markets and higher price of oil. Also, fewer planned maintenance shutdowns of units globally, would increase the refinery runs, it said. Global oil demand growth is expected to be 1.3 million barrels a day in 2018 and 1.4 million in the following calendar year. Refinery capacity addition is estimated at 800,000 barrels per day this year and 1.5 million barrels a day in 2019.