The March quarter results of Reliance Industries (RIL) in some ways mirrored its December quarter performance. The refining business again came to its rescue and more than offset the poor show by the oil and gas exploration, and petrochemicals segments. This improved the company’s March profit 32 per cent over the same period last year.
The operating profit of the refining segment more than doubled in the March quarter compared with the same period last year, despite only marginal growth in sales.
Gross refining margin of $10.1 a barrel ($7.6 in the March 2012 quarter) aided the profit growth. It also reflected in the segment’s operating margin which more than doubled to 4.5 per cent.
An improvement in the global refining market complemented the company’s strengths in crude sourcing.
The exploration business continued to disappoint with operating profit more than halving from the previous year. The declining output from the KG-D6 fields (less than 16 mscmd currently) has taken a toll with operating margin also declining to around 29 per cent in the March quarter from more than 36 per cent a year-ago. The silver lining is the improvement in output in the company’s shale gas ventures in the US. It grew 12 per cent over the December quarter, and more than doubled over the year-ago period. Continuing its poor run from the December quarter, the petrochemicals business again disappointed in the March quarter. Despite 3.5 per cent growth in sales over the year-ago period, operating profit fell around 13 per cent, reflecting the pricing pressure in the segment. Margin fell from 10.2 per cent to 8.6 per cent. After declining in the December quarter, other income in the March quarter staged a comeback growing 29 per cent on a sequential basis. Strong other income growth sequentially also helped RIL grow its overall March quarter net profit 1.6 per cent over the December quarter.
The core businesses – refining, petrochemicals and exploration – all showed a dip in operating profit on a sequential basis. The company’s cash hoard increased from Rs 80,962 crore as of December end to Rs 82,975 crore. It achieved cash break-even in its organised retail business in FY-13.
The RIL stock gained 1.4 per cent in Tuesday’s trade, ahead of the result announcement.