RIL net down 11.5%,misses forecasts

Weakening demand weighs down the most valuable firm....

With refining margins coming under pressure due to weakening demand for petro-products globally,Reliance Industries,Indias most valuable company,missed market forecasts by posting a 11.5 per cent decline in its net profit for the first quarter ended June 2009. RILs net profit fell for the third straight quarter to Rs 3,636 crore ($759 million) as against Rs 4,110 crore for the corresponding period of the previous year.

Even as crude oil prices declined,turnover for the quarter was Rs 33,309 crore ($7 billion) as against Rs 43,050 crore,reflecting a fall of 22.6 per cent over the corresponding period of the previous year. The decrease in prices accounted for 24.4 per cent reduction in revenue partially offset by higher volumes which accounted for 1.8 per cent growth in revenue, RIL said.

Indicating the global downturn in the oil and gas industry,exports were lower by 38.5 per cent at Rs 17,433 crore ($3.6 billion) as against $6.6 billion in the corresponding period of the previous year. According to RIL chairman Mukesh Ambani,timely completion with safe and stable start up of the new SEZ refinery and the deep-water,oil and gas KG D6 block are noteworthy accomplishments. These projects will not only play a significant role in shaping the future growth at RIL but more importantly will help change the energy landscape of India and the industry globally, he said.

Ahead of the announcement,RIL shares declined by 1.20 per cent to Rs 2,013.75 on the BSE on Friday. The Sensex had gone up by 148 points to Rs 15,378. Leading brokerages like Macquarie and Morgan Stanley had estimated a decline of 3-5 per cent in its profits.

The gross refining margin for the period was at $7.5 per barrel as against $15.7 per barrel in the corresponding period of the previous year. During the period,light heavy differential were lowest in last few years. The middle distillate cracks were under pressure due to low industrial activity,high inventory and global demand contraction. This weak refining environment was partially offset by improved gasoline margins, RIL said.

However,net operating margin was higher at 17.8 per cent as compared to 14.2 per cent in the corresponding period of the previous year due to incremental share of oil & gas business,stronger petrochemical margins,base effect of lower turnover partially offset by softer margin environment in refining.

Refining accounted for 65 per cent of Reliances revenue in the quarter ended June,while the oil and gas business contributed 5 per cent and petrochemicals the balance,RIL said in the statement.

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Meanwhile,another group firm Reliance Petroleum reported a net profit of Rs 105 crore for the first quarter ended June 30,2009. Total income of the company was Rs 7,646 crore in the quarter. It started commercial production on March 15,2009. Total expenditure during the quarter amounted to Rs 7,425 crore,RPL said in a statement,adding the total capital employed by the company is Rs 34,693 crore.