Mumbai(dna): Reliance Industries Ltd (RIL) on Friday posted its biggest quarterly profit in seven years with fourth quarter net income rising 10.8% to Rs 6,240 crore as earnings from refining crude increased.
Net profit in Q4 jumped 10.8% to Rs 6,240 crore. This is the highest quarterly net profit for RIL since it clocked Rs 8,079 crore in profit in the third quarter of 2007-08.
The company earned $10.1 for every barrel of crude it turned into fuels during the quarter (call it gross refining margin or GRM), compared with $9.3 a year earlier and $7.3 in the three months ended December 31, 2014.
Slump in crude prices and gas output hit the company as sales nosedived 41% to Rs 56,040 crore.
The quarterly earnings however beat the Rs 5,960-crore median of 16 analyst estimates compiled by Bloomberg. The company had reported net income of Rs 5,630 crore in the corresponding quarter a year ago. Consolidated net profit in the January-March quarter at Rs 6,381 crore was 8.5% higher than Rs 5,881-crore profit a year ago.
On Bombay Stock Exchange (BSE), the stock fell 0.2% to Rs 926.85 on Friday. The earnings were announced after the market hours.
For 2014-15, RIL reported a 4.8% rise in consolidated net profit to Rs 23,566 crore even as turnover fell 13% to Rs 3,88,494 crore.
The refining segment of oil-to-telecom conglomerate recorded the highest ever quarterly pre-tax profit (EBIT) of Rs 4,902 crore, up 23.7% year-on-year. This helped offset a 6.8% decline in EBIT in petrochemical business to Rs 2,003 crore and a near 36% slump in the same from oil and gas business to Rs 489 crore.
Its US shale gas business also saw a 23.1% drop in EBIT to Rs 336 crore but the booming retail business saw per-tax profits jumping from Rs 24 crore in January-March 2014 to Rs 104 crore in the fourth quarter of 2014-15.
"The fiscal 2014-15 has been a very successful and an important year for Reliance. In a time when the collapse of crude oil prices unsettled the hydrocarbons markets, our refining business delivered record earnings," said RIL chairman and managing director Mukesh D Ambani, in a statement.
Debt rose to Rs 160,860 crore from Rs 150,007 crore as on December 31, 2014. Cash balance also moved up to Rs 84,472 crore as on March 31 as compared to Rs 78,691 crore as on December 31, 2014. Interest cost at Rs 677 crore in the fourth quarter was lower than Rs 978 crore in corresponding period of the previous year due to lower average exchange rate during the quarter.
Stock analysts believe that higher profits would reinforce RIL's plans to spend Rs 1.8 lakh crore to boost petrochemical-producing capacity, open retail stores and start phone services in the world's fastest growing market for smart phones. The company is banking on its refineries to increase profit and make up for lower natural gas output.
Profit from making diesel in Singapore, an Asian benchmark, averaged $15.52 a barrel in the quarter ended December 31, compared with $17.86 a year earlier and $15.57 a barrel in the preceding three months, according to data from PVM Oil Associates in London.
RIL operates two refineries with a combined capacity of 1.24 million barrels a day located next to each other at Jamnagar in Gujarat. The units have the ability to process cheaper, lower grades of crude into high-value products for use in Europe and the US.
The company produces natural gas from the KG-D6 block off India's east coast with partners BP Plc, Europe's second-biggest oil company, and Canada's Niko Resources Ltd. Output from the field has been falling since the middle of 2010. The gas output from KG-D6 fell 5% to 36.5 billion cubic feet in the quarter from the previous three months, Reliance said. Oil production from the block fell 3% to 500,000 barrels and condensate output decreased 0.4% to 100,000 barrels.
Reliance Jio, the telecom arm, is all set to start a $12 billion telecommunications network this year to meet the growing voice and data demand, while Reliance Retail, which operates a chain of retail stores, looks to expand its presence.