Riding on better performance in retail, telecom and oil refining businesses, Reliance Industries (RIL) on Friday posted a record quarterly net profit of Rs 11,640 crore for the December quarter of 2019-20 as against Rs 10,251 crore — a rise of 13.5 per cent — in the year-ago period. However, RIL’s revenue decreased by 1.4 per cent to Rs 1,68,858 crore, compared to Rs 1,71,300 crore.
“The decline in revenue is primarily on account of 10.6 per cent fall in (oil-to-chemicals) O2C business revenues, with lower product price realisation and a 6.6 per cent fall in Brent crude price. This was partially offset by continuing growth momentum in consumer businesses. Digital services and retail business recorded an increase of 36.2 per cent and 27.4 per cent respectively, in revenue during the quarter compared to the corresponding quarter of the previous year,” RIL said.
Falling crude, lower product realisation drag down revenue
RIL's revenue declined on account of a 10.6 per cent fall in oil-to-chemicals (O2C) business revenues, with lower product price realisation and a 6.6 per cent fall in the price of Brent crude. Continuing growth momentum in consumer businesses marginally offset this. Digital services and retail business, which recorded an increase of 36.2 per cent and 27.4 per cent, respectively, in revenue during the quarter, are expected to add to its bottomline and topline going forward.
RIL subsidiary Reliance Jio reported a standalone revenue from operations, including access revenue, of Rs 13,968 crore, as against Rs 10,884 crore a year ago — a rise of 28.3 per cent. At a time when other telecom companies are reeling under heavy losses, Jio’s standalone net profit was Rs 1,350 crore, as against Rs 831 crore a year ago — a rise of 62.5 per cent.
RIL shares on Friday rose 2.79 per cent to close at Rs 1,580.65 on the BSE, ahead of the results announcement.
In the retail segment, overall gross sales at Rs 45,327 crore for the quarter was up 27.4 per cent over the corresponding period of the previous year.
Consumer electronics, fashion & lifestyle and grocery segments combined delivered accelerated growth of 35.7 per cent. Ebitda (earnings before interest, tax, depreciation and amortisation) for the quarter was at Rs 2,727 crore, growing 62.3 per cent year-on-year with margin on net revenue expanding 140 basis points from 5.3 per cent to 6.7 per cent.
RIL Chairman and MD Mukesh Ambani said: “The third quarter results for our energy business reflects the weak global economic environment and volatility in energy markets. Within our O2C chain, downstream petrochemicals profitability was impacted by weak margins across products with subdued demand in well-supplied markets. Refining segment performance improved in a difficult operating environment given our continuous focus on cost positions, high operating rates and product placement.”
“I am pleased with the progress of our consumer businesses which continue to establish new milestones every quarter. We saw consistent same store sales growth and record footfall across our stores driven by our compelling proposition of great shopping experience and superior value. Jio is focused on giving unmatched digital experience to consumers on a nationwide basis at most affordable price, and accordingly expanding network capacity and coverage to keep pace with demand. We are making good progress on the value unlocking initiatives announced earlier while building on sustainable growth platforms for our shareholders,” Ambani said.
According to Ambani, Jio is “delivering on our promise to be the driver of digital revolution in the country”. Subscriber base as on December 31, 2019 was 370.0 million, showing a 32.1 per cent growth. ARPU (average revenue per user) during the quarter was Rs 128.4 per subscriber per month.
Meanwhile, RIL’s oil refining margins rose after six straight quarters of decline, but the weakness in its traditional petrochemical businesses continued. The company earned $9.2 on turning every barrel of crude oil into fuel — gross refining margin (GRM) — compared to a GRM of $8.8 per barrel in the October-December 2018. The GRM was, however, lower than $9.4 per barrel earned in July-September 2019.
RIL’s third quarter revenue from the petrochemicals segment decreased by 19.1 per cent to Rs 36,909 crore ($ 5.2 billion) due to lower price realisations across product categories. Petrochemicals segment Ebit was at Rs 5,880 crore, down 28.5 per cent on a year-on-year basis, with significant decline in margins to near trough level for most petrochemicals products, as a result of new capacity, inventory overhang and global demand slowdown.
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