Reliance's quarterly profit drops 11% on slow petrochemical business

Net profit attributable to owners of the company in the three months ending in June dropped to $1.95 billion

Reliance Industries' gross revenue dropped 4.7 per cent yearly to more than $28.2 billion in the last quarter. Reuters

Reliance Industries, the Indian conglomerate controlled by billionaire chairman Mukesh Ambani, reported a nearly 10.8 per cent annual drop in its first-quarter profit due to a sluggish performance by its petrochemicals and refining business.

Reliance's fiscal year starts in April.

Net profit attributable to the owners of the company in the three months ending in June dropped to 160.1 billion rupees ($1.95 billion), from 179.5 billion rupees in the same period a year earlier, Mumbai-based Reliance said in a statement on Friday. It was down 17 per cent on a quarterly basis.

The results of India’s largest company by market value missed projections of analysts polled by Bloomberg, who had forecast a 183.02 billion-rupee profit.

The company’s gross revenue dropped 4.7 per cent yearly to more than 2.31 trillion rupees. It nosedived due to sharp decline in oil-to-chemical – or O2C – revenue, with a 31 per cent fall in crude oil prices, Reliance said.

This was partially offset by growth in consumer businesses and increase in volumes from O2C and oil and gas business, it added.

The O2C division’s revenue for the first quarter dropped 17.7 per cent to more than 1.3 trillion rupees ($16.2 billion) primarily on account of a sharp reduction in crude oil prices and lower price realisation of downstream products. This was partially offset by higher volumes, the company said.

The company said its depreciation increased by 31.7 per cent to more than 117.7 billion rupees due to expanded asset base across all the businesses and higher network utilisation in digital services business.

The capital expenditure for the last quarter stood at almost 396.4 billion rupees.

“Reliance’s strong operating and financial performance this quarter demonstrates the resilience of our diversified portfolio of businesses that cater to demand across industrial and consumer segments,” said Mr Ambani, Asia's wealthiest person.

Jio Platforms, Reliance's telecoms unit, posted a net profit of more than 50.98 billion rupees in the first quarter, up 12.5 per cent on an annual basis. The growth in the division was driven by subscriber gains in connectivity business and scale-up of digital services, the company said.

Its customer base rose 6.8 per cent to 448.5 million subscribers at the end of June. The company added 9.2 million new subscribers in the April-June period.

“Jio’s wide range of quality offerings at affordable price points has enabled strong growth in subscriber base, which reflects in the financial performance of the digital services business,” Mr Ambani said.

Reliance Retail posted a net profit of 24.48 billion rupees in the first quarter, up nearly 18.8 per cent. While revenue from operations surged to 621.6 billion rupees, from 515.8 billion rupees a year ago.

Retail business delivered a “robust revenue … led by growth in grocery, consumer electronics (excluding devices) and fashion and lifestyle”, Reliance said.

“The sustained growth across consumption baskets has further consolidated our position as a market leader,” said Isha Ambani, executive director, Reliance Retail Ventures Limited.

“We continue to innovate and invest in our stores and digital platforms to make shopping more engaging for our customers.”