Reliance Industries discloses first ever drop in quarterly sales in 6 years

23-Jan-09

Drastic drops in petroleum product margins have hit quarterly performance at Reliance Industries. RIL has reported a 8.75% drop in net sales for the 3 months to end-December to Rs 31,563 crore; the first decline in sales since the first quarter of 2002-03. Net profit, excluding exceptional items, fell 9.8% to Rs 3,501 crore during the period compared with Rs 3,882 crore in the year-earlier period, ahead of expectations. ETIG had expected RIL to announce a net profit of Rs 2,739 crore. RILs's performance was mainly driven by higher-than-expected revenues from the petrochemical segment and better GRMs. RIL's earnings drop is deemed by several analysts as temporary and would be reversed in the fiscal fourth quarter, when it is due to start producing 30-40 million cubic metres of natural gas a day in the second half of February. The company's earnings and sales will see benefits from its new refinery which was commissioned on December 25. Refining margins are, however, likely to remain flat until 2010-11 due to overcapacity and slower demand growth amid a global economic downturn. RIL's refinery is almost entirely export-focussed, leaving the company particularly exposed to a drop in global demand for petroleum products.