In the third quarter of 2020, India’s Reliance Industries Ltd. (RIL) posted a significant fall in net profit as the coronavirus pandemic damaged the sales of most of its products.
Consolidated net profit slumped to INR10,602 crore (USD1.4 billion), compared to INR11,352 crore (USD1.5 billion) in the corresponding time of 2019. The net profit attributable to the owners of the company slumped by 15% year-on-year to stand at INR9,567 crore (USD1.28 billion).
The non-controlling interest stood at INR1,035 crore (USD138.7 million) from the year ago’s INR90 crore (USD12 million). Sales also dropped to INR128,385 crore (USD17.2 billion) compared to the second quarter of 2019’s INR165,228 crore (USD22.15 billion), but still higher than the first quarter’s INR100,929 crore (USD13.5 billion).
Jio, RIL’s telecoms venture, was the group’s top performer with a net profit of INR2,844 crore (USD381 million), close to triple the year ago’s INR990 crore (USD132.7 million), and showed a 19% increase quarter-on-quarter. Its Earnings before Interest and Taxes (EBIT) soared to INR1,522 crore (USD204 million) from the previous quarter’s INR722 crore (USD96.8 million), but still lower than the third quarter of last year’s INR2,039 crore (USD273.3 million).
According to Chairman Mukesh Ambani, the petrochemical and retail recovery, as well as the digital services business’ sustained growth, propped the company’s performance compared to the previous quarter.
At the end of the quarter, the group’s debt was at INR279,251 crore (USD37.4 billion), but it had INR185,711 crore (USD24.9 billion) in cash and cash equivalents.
The petrochemical business showed improvements in the third quarter with EBIT jumped to INR4,895 crore (USD656 million), from the previous quarter’s INR3,392 crore (USD454.7 million) but still lower compared to INR7,620 crore (USD1 billion) a year ago.
The performance was highlighted by the increase in polyester product volumes in the domestic market with improved operating rates for spinning and texturizing units and the record high quarterly polymer domestic sales.
However, RIL’s refining and marketing sector was hit hard with both margin and revenue contracted. Gross refining margin slumped to USD5.7 compared to the first quarter’s USD6.3. EBIT nosedived from INR 2,892 crore (USD387.7 million) in the previous quarter and INR7,620 crore (USD1 billion) to INR2,000 crore (USD268 million).
Looking ahead, the group is optimistic about the third-quarter results. Business activity in retail was expected to be at pre-pandemic levels in the third quarter. Also, the recovering demand in its oil-to-chemicals and retail businesses, which are estimated to prop those sectors up.
