UpdateRIL’s Q2 profits rise by almost a third

18 October 2007 15:51  [Source: ICIS news]

(Updates and adds detail throughout)

MUMBAI (ICIS news)--India's Reliance Industries Limited (RIL) posted a 29.7% year-on-year rise in operating profits for the second quarter ended 30 September to Indian rupees (Rs) 59.5bn ($1.5bn), it said on Thursday, with the highest contribution coming from its refining segment, which grew 55.9% to Rs23.2bn.

"An integrated business model and market leadership in India enabled RIL in selling higher volumes at margins that were significantly above historical averages," it added.

The company’s petrochemicals segment posted a 4% year-on-year decline in earnings before interest and tax (EBIT) for the second quarter at Rs20.3bn and 1% higher revenues at Rs129.6bn.

Reliance’s petrochemicals EBIT for the first six months of its fiscal year rose 14% to Rs38.7bn, while its revenues for the period increased 6% to Rs261.7bn.

High feedstock prices, which impacted the petrochemicals business, during the first half of the year, were offset by strong demand from the end-user segments and allowed for better prices across the value chain, the petrochemicals major said in a statement.

The Indian petrochemical major’s second-quarter net sales increased 6.7% to Rs322.1bn, while its net profit jumped 41.6% to Rs38.4bn compared to the same period last year.

Higher revenues came from a 5% rise in prices, 4% growth in volume, and increased exports by 11% at $9.3bn, RIL said.

RIL’s quarter-on-quarter operating profit rose 12.6%, while its net sales were 12.6% higher. The company’s net profit for the period increased 17.6%.

"During the half-year period ended 30 September, the refinery processed 16.1m tonnes/year, an increase of 3%, and achieved an operating rate of 98%. Petrochemicals production grew by 7% to 9.8m tonnes/year," RIL said.

Strong domestic demand provided integrated producers like RIL the flexibility to pass on the increase in polyester and polymer prices, expanding its petrochemical margins, it added.

"Polyester units witnessed improved margins. However, on a chain basis, polyester margins remained flat primarily due to lower paraxylene (PX) margins," RIL said.

Polymer margins improved primarily due to gas-based crackers outperforming naphtha-based crackers, which were impacted by high crude prices, it added.

"Reliance has extended its global footprint with the acquisition of GAPCO in East Africa and Hualon’s assets in Malaysia," said company chairman Mukesh Ambani.

This acquisition [Hualon] would help RIL strengthen its position in the entire textile value chain and further consolidate its position as the world’s largest polyester manufacturer with a capacity of 2.5m tonnes/year, RIL said.

"Our investments in E&P [exploration and production], organised retail and development of special economic zones will all be the cornerstones for future growth," Ambani added.

Reliance planned to extend its competitiveness with incremental investments of $8bn-9bn in various projects, it said.

The company is setting up a 2m tonne/year olefins plant with matching downstream capacities and a 6m tonne/year integrated combined cycle coke gasification complex. It is also expanding its PX capacity in two phases from 1.9m tonnes/year to 4.5m tonnes/year.

Ambani said the company’s subsidiary Reliance Petroleum is building a refinery complex in Jamnagar, which was ahead of schedule.  

Reliance’s stock closed down 4.25% to Rs2,575.90 on the Bombay Stock Exchange.

($1 = Rs39.59)

By: Divya Chowdhury
+65 6780 4359

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