Saturday, January 21, 2012

RELIANCE INDUSTRIES LTD - QTRLY RESULTS - Q3 FY 2012 - Q/E DEC,2011 - NPT DOWN 14% YoY


                RELIANCE

INDUSTRIES 

LIMITED 
                
                RESULTS REVIEW
                Q3 FY 12 ENDING DEC,2011
                 
               

Ø    Following 2 strong quarters, 3QFY12 was one of the toughest quarters for the refining business globally:
Ø    Margins for Asian refineries declined due to steep fall in product cracks
Ø    US refining was also impacted due to reduction in WTI-Brent differential and reduced gasoline cracks
Ø    At $ 6.8/bbl, GRM for RIL was lower by $ 3.3/bbl on Q-o-Q basis due to lower product cracks particularly light distillates and solids. 9M FY12 GRM still higher at $ 9.0/bbl vis-à-vis $8.1/bbl in the previous year
Ø    RIL maintained its operating leverage and processed 51.4 MMT (operated at 110%)
Ø    Gas volume from KG-D6 was lower at 436.4 BCF (down 22%). Joint technical teams continue their review and analysis
Ø    Marginal impact on petrochemical performance despite market weakness – RIL production up by 5% on a Y-o-Y basis
Ø    Volume growth in US shale business even as gas prices soften - gross exit production at 233 MMCFD of gas and 34.7 MBPD of condensate
Ø    Government approved commerciality for onshore discovery in GS-O1 and the optimised FDP for 4 satellite discoveries in KG-D6

FINANCIAL RESULTS – 9M FY 12

In Rs.Cr
9M FY12
9MFY11
CHANGE%
TURNOVER
251958
183368
37
PBDIT
30952
30418
2
PBDIT MARGIN
12.30%
16.60%

NET PROFIT
15804
14910
6

Ø  Growth in turnover led by 33% increase in prices and 4% higher volume
Ø  Lower contribution from E&P business impacts PBDIT Margins. E&P business impacted due to reduced volume and transfer of 30% PI in KG-D6
FINANCIAL RESULTS – 3 Q FY 12
2QFY12
IN RS.CR
3QFY12
3QFY11
CHANGE%
80790
TURNOVER
87480
62399
40%
10946
PBDIT
9002
10286
-12%
13.50%
PBDIT MARGIN
10.30%
16.50%

5703
NET PROFIT
4440
5136
-14%

Ø  .Growth in Revenue mainly due to higher price Environment for  R&M and Petrochemicals which were up 34% while volumes were higher by 6%

Challenging Environment across business :

Ø  E&P impacted due to lower Production and transfer of 30# PI in KG-D6
Ø  R&M impacted by lower GRM ($ 6.8 / bbl cs $ 9.0 / bbl)
Ø  Petrochemicals impacted by reduction in deltas and weak demand
Ø  Decline in Qtrly EBITDA due to lower margins and lower E&P volumes (change in PI and lower production)
Ø  EXPORTS TREND : Higher crude throughput in the SERZ refinery and higher price environment resulting in record 3Q Exports (Up 61% on YoY basis) from 50,136 in Q2 to 54,880 in Q3.
SEGMENT RESULTS - 9MFY12



Rs.Cr
9Mfy12
9Mfy11
change%
volumeCg%
Price Cg%
REFINING





Revenues
218523
152727
43.10%
3.90%
39.20%
EBIT
7958
6663
19.40%


EBIT%
3.60%
4.40%



PETROCHEMICALS




Revenues
59213
44961
31.70%
6.80%
24.90%
EBIT
6793
6679
1.70%


EBIT%
11.50%
14.90%



OIL&GAS





Revenues
10289
13146
-21.70%
-28.40%
6.70%
EBIT
4299
5131
-16.20%


EBIT%
41.80%
39%




Ø  Higher crude throughput, higher petrochemical volumes and high price environment result in higher revenues
Ø  EBIT Growth in R&M and petrochemicals segment – margins lower due to base effect.

SEGMENT RESULTS -  3Q-FY12



Rs.Cr
9Mfy12
9Mfy11
change%
volumeCg%
Price Cg%
REFINING





Revenues
76738
52524
46.10%
7.70%
38.40%
EBIT
1685
2436
-30.80%


EBIT%
2.20%
4.60%



PETROCHEMICALS




Revenues
19781
15962
23.90%
2.60%
21.30%
EBIT
2157
2429
-11.20%


EBIT%
10.90%
15.20%



OIL&GAS





Revenues
2832
4178
-32.20%
-45.00%
12.70%
EBIT
1294
1504
-14.00%


EBIT%
45.70%
36%




Ø  Lower GRM at $ 6.8 / bbl (as against $ 9.0 / bbl in 3Q FY 11 and $ 10.1 /bbl in 2Q FY 12) resulting in sharp fall in R&M EBIT
Ø  Lower  Deltas in both chains result in lower Petrochemical EBIT
Ø  Reduced Production resulted in lower  OIL & GAS EBIT. EBIT Margins improvement due to higher curde price realization (up 14% on a YoY basis).

NET PROFIT BRIDGE – 9M FY12 vs 9M FY 11

Net Profit 9M FY 11 ;- Rs.14,910 Cr
Operating Profit :-      Rs. (1,228) Cr
Other Income :-         Rs.1,762     Cr
Interest :-               Rs.(267)     Cr
Depreciation :-           Rs.1,487 cr
Tax                        Rs,(860)    Cr
NET PROFIT 9M FY 12 : Rs.15,804 Cr

Ø  Net profit up by Rs.894 Cr compared to previous period.
Ø  It is due to Higher other Income and lower depreciation (Lower gas production and transfer of 30% PI in KG-D6) partly impacted by higher interest and tax.
Business mix – 9M FY 12
Revenues : 75.6% Refining + Petrochem 20.5%  +  oil & gas 3.6% + 0.3% Others
EBIT : 41.7% Refining + Petrochem 35.6%  +  oil & gas 22.5% + 0.1% Others

FINANCIAL RATIOS


R I L

Dec-11
Mar-11
CASH BALANCE (CR)
74539
42393
NET DEBT:EQ
DEBT FREE
0.17
NET GEARING
DEBT FREE
13.50%
GORSS INTT COVER
13.50%
14.70%
ROCE%

12.80%
13.20%
ROE% Adjusted
14.20%
15.50%

Ø  Strong financials with a conservative Balance sheet
Ø  BBB POSITIVE outlook by S&P; Baa2 Positive Outlook by Moody’s
Ø  Domestic Debt Rated AAA by CRISIL & FITCH
Ø  Weaker Margin environment and higher other income impact ROCE and ROE for 9M FY 12
                3Q  FY 12 BUSINESS HIGHLIGHTS
                 
                Achieved gas production of 133 BCF & 1.4 MMBBL of condensate/oil in KG-D6
                Cumulative production of 1,693 BCF and 18.2 MMBBL of oil / condensate
                Approvals received:
                Commerciality for offshore discovery in GS-O1
                Optimised FDP for 4 satellite discoveries in D6
                10 production wells drilled in CBM blocks Sohagpur (E/W), taking total to 36
                Commenced hydraulic-fracturing of development wells
                Relinquished onshore block AS-17
·         Ongoing Optimization in order to maximize resource utilization

                REFINING & MARKETING
                BUSINESS ENVIRONMENT
                 
                nFinancial crisis in Europe and low economic growth assessment
                IEA further lowers its 2011 growth estimate to 0.7 MBD but remains optimistic for demand growth in 2012
                Margin improvement trend reversal in 3Q FY12 for refiners with sharply lower product cracks
                Gasoline margins globally and petrochemical feedstock margins in Asia affected most
                Sweet-sour spreads weaken as a result of strong FO market
                Narrowing Arab Heavy - Dubai differential hurting Asian refining margins
*  *  *  x  x  x  *  *  *

STAND ALONE RESULTS OF RIL FOR Q3 FY 12 – with comparison  with Q2 and Q1 and difference in percentages are given in table below :
Ø  Net Sales at Rs.84315 cr - have gone up by 8.36% from Q2 FY 12, the previous qtr and 5.08% from Q1 FY 12.
Ø  Net Profit     at Rs.4440 Cr – is down by -22.15% from Q2 FY 12 and by -21.57% from Q1 FY 12.
Ø  Basic EPS     stands at Rs.13.6 in Q3 FY 11; compared to Rs.17.4 in Q2 FY 12; and Rs.17.3 in Q1 FY 12.
Ø  While there is decline in Quarterly EPS in Q3, we will need to wait for Q4 to assess the full Year EPS. If the Q4 EPS stands at same level, annual EPS will be around Rs.62 on a Face Value of Rs.10.
Ø  Current MP is Rs.794.10 while the 52 week high price is Rs.1065.90 and the 52 week low price  is Rs.687.10. The PE Ratio on the above comes to 12.81.
Ø  Reliance fortunes are tied to many changing Global  factors and Business Environment. But, its expansion plans are very impressive, in each of its ventures. As its other Businesses pick up volumes, its dependence on oil and Gas and R&M will come down gradually. Oil and Gas volumes especially has suffered huge negative change in volumes. Every improvement in this segment will yield much better turnover and profits in coming quarter.
Stand alone results table:
RIL-S/A
31-Dec-11
30-Sep-11
%DIF1
30-Jun-11
%DIF2
Net Sales
8513500
7856900
8.36
8101800
5.08
Increase in SIT/WIP
-148900
-160700
-7.34
89700
-266
 Raw Materials
7419000
6466100
14.74
6444300
15.12
Traded Goods
11200
51400
-78.21
57300
-80.45
Employees Cost
67200
71500
-6.01
87800
-23.46
Depreciation
257000
296900
-13.44
319500
-19.56
Other Expenditure
436500
444200
-1.73
430100
1.49
Total Expenditure
8042000
7169400
12.17
7428700
8.26
Profit from Operations
471500
687500
-31.42
673100
-29.95
Other Income
171700
110200
55.81
107800
59.28
Interest
69400
66000
5.15
54500
27.34
Profit before tax
573800
731700
-21.58
726400
-21.01
Tax expense
129800
161400
-19.58
160300
-19.03
Net Profit
444000
570300
-22.15
566100
-21.57
Face Value (In Rs
10
10
0
10
0
Paid Up Equity
327500
327400
0.03
327400
0.03
Basic EPS
13.6
17.4
-21.84
17.3
-21.39
Public holding (%)
55.29
55.29
0
55.28
0.02

 *  *  *  E  N  D  *  *  *

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