MUMBAI: The sharp decline in crude oil prices globally has hit Reliance Industries Ltd (RIL) earnings as the company reported a 4.5 per cent fall in net profit for the quarter ended Dec 31, 2014 at Rs 5,256 crore. The crude price fall has also reduced the value of its stocks and ate into its refining margins. The company operates one of the world’s biggest oil refineries.
The benchmark crude oil prices fell by 40 per cent during the quarter and had an impact on petrochemical feedstock and product prices. Declining feedstock prices impacted buying sentiment across product categories, and downstream converters reduced their inventories and operated at minimal stock levels.
“RIL, in line with its operating strategy, aggressively sold down stocks to maintain optimal levels of inventory, which impacted realised deltas and margins for product. This coupled with lower holding value of closing-stock impacted performance of refining and petrochemicals businesses,’’ the company said.
The company on Friday, posted a turnover of Rs 96,330 crore in the quarter ended Dec 31, 2014 compared with Rs 1,21,077 crore posted during the same quarter a year earlier. Also, exports from India fell 21.5 per cent to Rs 58,507 crore from Rs 74,495 crore.
“Our focus on operational efficiency and the superior configuration of assets helped us deliver an industry-leading performance in the refining and petrochemicals business despite sharp decline in crude and feedstock prices,” said Mukesh Ambani, Chairman and MD of RIL.
“We continued to advance our refining and petrochemicals business capital investments, which will come to fruition over the next 4 to 6 quarters,” he added.
According to Morningstar India analyst Piyush Jain, the company’s results are broadly in line with estimates. “Petrochemical segment delivered higher margins owing to favorable naphtha cracks. Refining segment delivered superior operating margins of 4.4 percent versus our estimate of 4.3 percent,’’ said Jain.
Reliance Retail’s turnover grew 19 per cent over the same quarter a year earlier to Rs 4,686 crore. The division added 279 new stores during the quarter. Reliance Retail operates 2,285 stores across the country.