NEW DELHI - Reliance Industries Ltd. Friday posted a drop in its net profit for the third straight quarter, hurt by the conglomerate's energy business where refining margins remained weak and natural-gas output dropped.
Net profit fell 21% to 44.73 billion rupees ($808 million) in the April-June quarter from 56.61 billion rupees a year earlier, while sales rose 13% to 918.75 billion rupees from 810.18 billion rupees.
The average of forecasts from 11 analysts was for a net profit of 43.75 billion rupees on sales of 861.82 billion rupees.
The profit drop underlines the stress that the company is facing in its core energy operations. Reliance is struggling to raise production from its natural gas field due to technical difficulties, while weak demand for fuel products globally is hurting its refining margin.
Billionaire Chairman Mukesh Ambani said in June the Mumbai-based company will invest about 1.0 trillion rupees over the next five years to expand and diversify its businesses that range from gas production and oil refining to selling groceries and vegetables.
Reliance is investing in telecom, retail, homeland security, financial services, hotels and media as it seeks to cut exposure to India's heavily regulated oil and gas sector. It has also purchased shale gas acreage in the U.S.
For now, support for its profit is coming from non-operating income.
The company said its non-operating income grew 77% to 19.04 billion rupees in the past quarter, boosted by income from treasury operations.
The company had total debt of 732.13 billion rupees and cash and equivalents worth 707.32 billion rupees as of end-June.
Analysts say Reliance's difficulties on its core operations will continue to put pressure on its stock.
Its shares have risen about 4% since January, undeperforming an 11% increase in the benchmark Sensitive Index.
Reliance and its partners are struggling to raise production from their D6 block in the Krishna Godavari basin, India's largest gas find.
The field produced 104.40 billion cubic feet of gas during the last quarter, down 33% from a year earlier, due to reservoir complexity and natural decline.
While Reliance holds a 60% stake in the block, U.K.'s BP PLC owns 30% and Canada's Niko Resources Ltd. the rest.
Ahead of the results, Reliance's shares closed 0.7% down at 722.65 rupees. The benchmark index also dropped 0.7%.
Reliance, which has a nameplate refining capacity of 1.24 million barrels a day, saw earnings from converting a barrel of crude into products during the past quarter decline 26% from a year earlier to $7.6 a barrel on weak demand for products due to the global economic turmoil.
Copyright (c) 2012 Dow Jones & Company, Inc.
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