Reliance Jio and Reliance Retail boost earnings for Mukesh Ambani-owned RIL
- The Mukesh Ambani-owned company reported its earnings for the last three months ending December 2019.
- The share price of Reliance Industries (RIL) has run up over 40% since the lows it hit in August 2019.
- These are some of the highlights from the earnings report from one of India's most-valued companies which has businesses spanning from oil and gas exploration to telecom to retail.
Consolidated revenue was at ₹1.53 lakh crore, and profit was ₹11,640 crore compared to a year earlier with a 1% growth in earnings before interest, tax, depreciation, and amortisation (EBITDA) to over ₹22,386 crore.
The big boost has come from the retail business while the petrochemicals business performance disappointed. The gross refining margin came in at $9.2 a barrel.
These consumer businesses i.e. retail and telecom make for 37% of the conglomerate's EBITDA compared to less than 1% five years ago, Chief Financial Officer Alok Agarwal said in a statement after the earnings. "The revenue and profit from retail for the first nine months of the current fiscal are more than the full-year figures of the last financial year," he added.
The revenue from petrochemicals fell over 4%, while the EBITDA fell over 19% due to a fall in prices of products.
A key product, Ethylene prices weakened and reached near 10 -year low with ample supply post start-up of new ethylene export facility in US and new ethane-based crackers in US. "The third quarter results for our energy business reflects the weak global economic environment and volatility in energy markets. Within our O2C chain, downstream petrochemicals profitability was impacted by weak margins across products with subdued demand in well-supplied markets. Refining segment performance improved in a difficult operating environment given our continuous focus on cost positions, high operating rates and product placement," Chairman Mukesh Ambani said.
The share price of Reliance Industries (RIL) has run up over 40% since the lows it hit in August 2019.
These are some of the highlights from the earnings report from one of India's most-valued companies which has businesses spanning from oil and gas exploration to telecom to retail.
1. Reliance Retail posts a 62% jump in profits as the company is on store-opening spree taking the total count to 11,316 across India. "We had over 176 million customers walk into our stores during this quarter with registered customers at 117 million, growing 42.6% over the same period last year," the CFO added.
2. The average revenue per user went up 7% while the subscriber addition was at 14.8 million during the three months. Net Profit from Reliance Jio increased by 63.1% to ₹1,360 crore compared to a year earlier.
"As we increased tariff, and started charging for inter-connection, a lot of marginal users who used Jio mostly for voice calls have moved out of the network," CFO Agarwal said.
3. The impact of Supreme Court's verdict: Liability towards license fees/spectrum usage charges will be ₹177 crore.
4. Net debt reduced sequentially. For the first time in 20 quarters, consolidated cash profits exceeded capital investments.
5. After 25 years of operating the Panna-Mukta oil and gas fields, the Panna-Mukta and Tapti (PMT) Joint Venture partners has handed over the Panna-Mukta oil and gas fields back to the Government of India’s nominee i.e. Oil and Natural Gas Corporation (ONGC) on 21st December 2019.
6. RIL’s exports of refined products from India were at $6.1 billion during the quarter compared to $ 6.9 billion same time last year. In terms of volume, exports of refined products were 10.6 million metric tonnes (MMT) compared to 10.8 MMT a year earlier.
One of the factors that hit the energy market was the reduction of inventory due to the US-China trade war, the management explained.
7. Polyester producers in China slashed prices to off-load the rising stocks, leading to bouts of brisk sales at low prices.
8. KG-D6 field produced 4.96 BCF of natural gas in 3Q FY20, lower by 18.4% compared to a year earlier and down 9% from three months ago.
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