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Reliance operating profit grows 22%

Sunday, July 29, 2007

Reliance Industries reported an impressive performance in April-June 2007 helped by strong growth in its two main divisions -- refining and petrochemicals.

As a result, the company’s operating profit grew 22.2 per cent to Rs 5,177 crore in the last quarter, compared with the previous corresponding quarter, while its net turnover grew 14.4 per cent to Rs 28,056 crore. Its operating profit margin also improved 115 basis points to 18.45 per cent in Q1 FY 08.

In its key refinery division, the company processed 8.01 million tonnes in the April-June this year, a growth of 6.7 per cent. Of crucial importance is that RIL’s gross refining margin (GRMs) was $15.4 per barrel in the last quarter as compared to $ 12.4 per barrel in the same quarter a year ago.

RIL’s GRM was $13 per barrel in January-March 2007. The regional benchmark, the Singapore refining margin, was $ 9.5 per barrel in the June 2007 quarter, a rise of 7 per cent.

Clearly, Reliance has once again been able to do better than the growth in the regional benchmark in the last quarter, thanks to its ability to process heavy and sour crude, coupled with average international crude oil prices that were lower on a y-o-y basis in the first quarter of this financial year. As a result, segment profit of the refining division grew 25.7 per cent to Rs 2,558 crore.

In RIL’s petrochemical division, production was 3.64 million tonnes, growth of 15.3 per cent. The company highlighted higher product prices for its petrochemical product chain, coupled with enhanced production which led to a 36.2 per cent growth in segment profit of petrochemicals division to Rs 1481 crore in Q1 FY08.

Reliance had earlier acquired IPCL and it is still subject to completion of the necessary legal facilities to enable consolidation of quarterly results with itself. In the interim, IPCL has reported a 7.6 per cent y-o-y growth in its operating profit (including other income) in Q1 FY08.

Going forward, Reliance is expected to continue leveraging strong GRMs on a y-o-y basis, given signs of a global shortage of refining capacity.

Posted by FR at 7:22 PM  


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