RIL Q1 Results: Profit Falls 7% On Lower Oil Demand, Retail Slowdown
Reliance Industries Ltd.'s quarterly profit declined as its refining unit saw lower volumes and sales, while its retail arm struggled due to store shutdowns amid the second wave of Covid-19.
The Mukesh Ambani-led conglomerate’s profit fell 7% sequentially to Rs 12,273 crore in the quarter ended June, according to its exchange filing. That compares with the Rs 11,889.8-crore consensus estimate of analysts tracked by Bloomberg.
Net sales fell 6% over the previous quarter to Rs 1.39 lakh crore—lower than the estimated Rs 1.47 lakh crore.
Operating profit rose 3.6% to Rs 27,550 crore.
Operating margin widened to 19.7% from 17.8% earlier.
Reliance said the second wave of Covid-19 resulted in a drop in domestic demand. The company tried to absorb some of that impact through increased exports.
Growth in key polymer spreads supported the petrochemicals segment. Spreads of polyethylene, polypropylene and PVC naphtha, which rose to multi-quarter highs in the three months through March, have since softened.
Benchmark Singapore GRMs rose 16.7% sequentially to $2.1 per barrel in the quarter June. Brent crude prices averaged $69.1 per barrel during April-June—rising 13% over the last quarter. Petrol, diesel, and jet fuel spreads have jumped 44%, 13%, and 36% on a sequential basis in the first quarter of the ongoing fiscal.
Operating profit of RIL's oil-to-chemicals unit rose 7.2% sequentially to Rs 12,231 crore, led by rebound in transportation fuel cracks. Weakness in domestic demand was offset by higher exports, it said. Its throughput inched up 1.6% over the last quarter to 19 million metric tonnes.
"In our O2C business, we generated strong earnings through integrated portfolio & superior product placement capabilities," Mukesh Ambani, chairman and managing director of Reliance Industries, was quoted as saying in a statement.
Operating profit of its exploration and production segment jumped 66% quarter-on-quarter to Rs 797 crore, helped by ramp-up of gas production from R-cluster and as production started at its satellite cluster field in the KG D6 block. Combined production from these two fields is now more than 18 million metric standard cubic meters per day.
Net profit of Jio Platforms Ltd., the holding company for the group’s digital ventures and telecom unit, rose 4% over the previous quarter to Rs 3,651 crore.
Reliance Jio Infocomm Ltd.’s average revenue per user remained flat at Rs 138.4 from the previous quarter. The company’s total customer base as on June 30 was 44 crore, having added 1.4 crore during the quarter.
Reliance Retail's revenue from operations fell 18.7% sequentially during the quarter.
The company said that operating environment was challenging during the quarter as stores were shut because of various local lockdowns across the country.
"After second week of June, there were sporadic signs of easing with continued restrictions varying across geographies," it said. "Retail stores and digital commerce could sell only essentials for the most part of the quarter."
The company opened 123 stores during April-June, taking the total count to 12,803. Another 700 stores are set to be commissioned as Covid-19 lockdown-related curbs are lifted. Stores operated at 70%, 25% and 38% of normal working hours during April, May and June, respectively, amid the pandemic's second wave.
Digital commerce and merchant partnerships contributed 20% of retail sales.