Reliance Industries posts 1Q16 results

Reliance Industries Limited (RIL) has reported its financial results for the quarter ended 30 June 2015 (1Q16).

“Our financial performance reflects the benefits of integrated hydrocarbon chain activities in a benign oil price environment,” said Mukesh D. Ambani, Chairman and Managing Director, Reliance Industries Limited. “The sharp increase in demand for transportation fuels helped us realise strong refining margins. Oil product demand globally is estimated to have grown at ~1.6 million bpd, resulting in high refinery runs across all regions. Our petrochemicals business recorded a strong quarterly performance supported by high operating rates and margin strength in the ethylene chain. In our retail business, we have reached significant milestones over the past couple of years and continue the high growth trajectory for this business.”

“As we look forward, we are committed to accelerating the growth of operating EBITDA,” Amban continued. “We are leveraging the strength of our integrated value chains to deliver sustainable growth. Large investments in our petrochemicals and refining businesses are based on advantaged feedstocks to enable us to stay among low cost, competitive producers in an evolving hydrocarbon chain environment. We maintained rapid progress in project construction activity at Jamnagar. The company’s world scale petcoke gasification project and ethylene cracker are on track for planned start up in 2016. We are also in the final lap of launch of our Jio services, which will bring about a positive transformation in the lives of millions of Indians.”

Financial performance

  • For the quarter ended 30 June 2015, RIL achieved a turnover of Rs.83,064 crore (US$13.1 billion), a decrease of 23.0%, as compared to Rs.107,905 crore in the corresponding period last year. Decline in revenue was led by the 43.5% y/y decline in benchmark (Brent) oil price. Exports from our Indian operations were lower by 44.9% at Rs.36,717 crore (US$5.8 billion), against Rs.66,600 crore in the same period last year, due to lower product prices in line with lower crude oil prices.
  • Cost of raw materials declined by 39.1% to Rs.50,305 crore (US$7.9 billion) from Rs.82,631 crore on a y/y basis primarily, on account of the sharp decline in crude oil prices.
  • Employee costs were at Rs.1,976 crore (US$310 million), compared to Rs.1,480 crore in the same period last year due to higher payouts and the consolidation of Network 18 Media & Investments Limited.
  • Other expenditure stayed flat on a y/y basis, moving from Rs.9,034 crore to Rs.9,055 crore (US$1.4 billion).
  • Operating profit before other income and depreciation increased by 13.2% on a y/y basis from Rs.8,989 crore to Rs.10,177 crore (US$1.6 billion) with higher contribution from the refining and petrochemicals business.
  • Other income was lower at Rs.1,832 crore (US$288 million) compared to Rs.1,974 crore in the same period last year, primarily on account of lower accruals on investments.
  • Depreciation (including depletion and amortisation) was higher by 9.3% to Rs.3,041 crore (US$478 million) compared to Rs.2,782 crore recorded in the corresponding period in 2014, primarily on account of higher depletion in domestic E&P and consolidation of Network 18 Media & Investments Limited.
  • Interest cost was at Rs.902 crore (US$142 million), compared to Rs.505 crore in corresponding period last year. Interest cost was higher mainly on account of the depreciation of the Indian rupee during the quarter.
  • Profit after tax was higher by 4.4% at Rs.6,222 crore (US$1.0 billion), against Rs.5,957 crore in the same period a year earlier.
  • Basic earnings per share (EPS) for the quarter ended 30 June 2015 was Rs.21.1, compared to Rs.20.3 in the same period last year.
  • Outstanding debt as of 30 June 2015 was Rs.170,814 crore (US$26.8 billion) compared to Rs.160,860 crore as of 31 March 2015.
  • Cash and cash equivalents as of 30 June 2015 were at Rs.87,391 crore (US$13.7 billion).

Refining and Marketing

During 1Q16, revenue from the Refining and Marketing segment decreased by 29.9% y/y to Rs.68,729 crore (US$10.8 billion), while EBIT increased by 37.7% y/y to a record level of Rs.5,252 crore. RIL’s gross refining margins (GRM) for 1Q16 stood at a six year high of US$10.4/bbl compared to US$8.7/bbl in 1Q15. Strong gasoline cracks led by robust demand growth, lower energy cost and favourable crude differentials helped boost refining margins.

Petrochemicals

1Q16 revenue from the Petrochemicals segment decreased by 17.9% y/y to Rs.20,858 crore (US$3.3 billion), with product prices reflecting lower crude and feedstock prices on a y/y basis. Petrochemicals segment EBIT increased sharply by 25.5% to Rs.2,338 crore (US$367 million). Strong polymer deltas and a sharp rebound in fibre intermediatedeltas were key drivers for the improved earnings. Petrochemicals EBIT margins were higher at 11.2% with strong product deltas, despite lower absolute product prices.

Oil and Gas (Exploration and Production)

1Q16 revenues for domestic E&P operations stood at Rs.1,200 crore. Lower oil/condensate prices and a decline in gas production led to the 22.9% fall in revenues. This fall has largely driven segment EBIT declining by 83.0% to Rs.83 crore (US$13 million).

Access Reliance Industries’ financial results in full here.


Adapted from press release by Rosalie Starling

Published on 29/07/2015


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