RIL's Q1 net jumps 18% on higher refining margins, weaker rupee

Mumbai: Reliance Industries' consolidated profit in the first quarter of 2016-17 fiscal rose 18% to Rs 7,113 crore ($1.1 billion), riding on strong margins in its refining and petrochemicals business.
The jump in consolidated profit, which stood at Rs 6,024 crore in the year-ago period, was propelled by refineries earning $11.5 on each barrel of crude processed as against $10.4 a year earlier, helped by a weaker rupee.RIL's earnings beat analyst estimates of Rs 6,508 crore, according to Bloomberg. RIL's revenues for the quarter ended June 30, however, declined 13% to Rs 71,451 crore ($10.6 billion) as the benchmark (Brent crude) oil prices declined 26% in the last one year. Exports fell 9% to Rs 33,282 crore ($4.9 billion) due to lower product prices.
Revenues from the company's mainstay - refining and marketing - decreased nearly 18% to Rs 56,568 crore, but operating profit from the segment increased 30% to Rs 6,593 crore ($1 billion). It accounted for 79% of RIL's turnover and 68% of its operating profit in the June quarter.
Petrochemicals, the second biggest contributor to revenues, declined marginally to Rs 20,718 crore from a year ago but operating profit increased 21% to Rs 2,806 crore. This segment accounted for 29% of the company's revenue as well as operating profit.
"Though regional refining margins trended downwards, our high-conversion refining system was able to take advantage of higher margins on middle distillates and wider discounts on sour crude oils. Our refining business delivered another record performance and achieved industry-leading gross refining margin," said Mukesh Ambani, CMD, RIL, which operates the world's biggest oil-refinery complex in Jamnagar, Gujarat. The company's shares ended 0.6% higher at Rs 1,012 on the BSE ahead of the results. Analysts expect the price to improve on the back of its better-than-expected margins.
Revenues from the oil and gas business declined nearly 35% to Rs 1,340 crore, clocking an operational loss of Rs 312 crore in first quarter of this fiscal. In the year-ago period, the business reported an operating profit of Rs 199 crore. The decline was due to lower production at its KG-D6 and Panna-Mukta-Tapti blocks and lower domestic gas prices. The company's retail unit's revenue and operating profit rose 45.8% to Rs 6,666 crore and 31% to Rs 148 crore, respectively. Other income rose to Rs 2,378 crore compared to Rs 1,584 crore in Q1FY16 due to higher interest income and profit on sale of investments.
Higher profits will help RIL fuel expansion in its various businesses, including telecom. The company said it is testing its fourth-generation, high-speed data services with over 1.5 million users and expects the "test program to be upgraded into commercial operations in the coming months". The company said that average monthly consumption per user is in excess of 26 GB and is increasing rapidly. Average voice usage per month is over 355 minutes.