Reliance Earnings Rise 31%

123jump.com Staff
18 Oct, 2007
New York City

Reliance Industries earnings jumped 31% on revenue increase of 9% in the first half of the fiscal 2008. Reliance with the largest market cap in India crossed $100 billion mark. Earnings per share increased to 51.40 rupees from 39.30 rupees. Total debt at the end of the period stood at 28,600 crore rupees or $7.2 billion. Reliance Retail now has 329 stores. Reliance expects to complete its expansion to build the largest crude oil refinery in the world ahead of schedule.

[R]1:00PM New York, 11:00PM Mumbai – Reliance first half profit increased 31% on 9% increase in sales.[/R]

Reliance Industries Limited reported first half net income increase of 31% to 7,467 crore rupees on the revenue increase of 9% to 64,692 crore rupees. Exports in the period increased 11% to $9.3 billion. Earnings per share increased to 51.40 rupees from 39.30 rupees.

Reliance Industries, often viewed as a proxy to investing in India, is the largest exporter from India, largest company by sales and with the largest market capitalization on the stock exchange. The recent flood of foreign investments attracted to India has lifted its market cap above $100 billion.

Increase in revenue was due to 5% increase in prices and 4% growth in volume. During the period under review, aggregate exports were higher by 11% at Rs. 37,074 crore (US$ 9.30 billion).

Reliance Industries generates nearly 70% of its revenue from crude oil refining business and 30% from the petrochemicals business. The company has benefited from the sharp rise in crude oil prices and has recently diversified into oil exploration in India and Yemen.

In the fiscal second quarter the revenue jumped 6.6% to 32,211 crore rupees and earnings increased 27% to 3,837 crore rupees from 3,000 crore rupees a year ago. Earnings per share increased to 26.40 rupees from 20.60 rupees.

During the half year period ended 30th September 2007, the refinery processed 16.1 million tons, an increase of 3%. It achieved an operating rate of 98%. Petrochemicals production grew by 7% to 9.8 million tons, against 9.1 million tons for the corresponding period of the previous year.

During the half year, the Jamnagar refinery processed 16.1 million tons of crude with an average utilization rate of 98%, which is significantly higher than the average utilization rates for refineries globally. For the period under review, average refinery utilization was at 87.4% in North America, 84.1% in Europe and 85.7% in the Asia Pacific region.

During the same period, export of refined products was $ 6.99 billion accounting for 60% of production volumes. Exports of refined products were at 10.8 million tons during the half year as compared to 8.8 million tons for the corresponding period of the previous year.

Domestic marketing margins continue to be under pressure due to lack of a level playing field for the private sector marketing companies. The period witnessed high crude oil prices without any corresponding improvement in the domestic selling price.

Petrol prices sold at Reliance locations were on an average higher by 2.50 rupees per liter keeping its market share down to RIL’s market share diesel retailing at 1.6% and for petrol retailing at 3.0%. Reliance added 38 retail outlets during the period under review taking a total number of retail outlets to 1,423.

RIL's gross refining margin declined from $15.4 in the quarter a year ago to $13.6 in the quarter ended September 2007. The margin the first half of the fiscal year was at $14.50 as against $10.7 per barrel. The Jamnagar refinery is designed to handle the production of middle distillate products (Gasoil and Jet Kerosene) where margins remained firm with strong global demand.

For the period under review, revenues for the petrochemical segment increased by 6% from Rs 24,654 crore to Rs 26,174 crore. Increased prices accounted for 4% of the growth while the balance 2% was on account of higher volumes. During the period, EBIT from the petrochemical segment increased by 14% from Rs. 3,408 crore to Rs 3,870 crore.

The outstanding debt as on 30th September 2007 was Rs 28,607 crore ($ 7.18 billion) compared to Rs 27,826 crore as on 31st March 2007. Net debt as on 30th September 2007 was 23.0% as compared to 25.2% on 31st March 2007.

Reliance Retail Limited ended the second quarter with 329 Reliance Fresh stores in over 30 towns and cities. Towards the end of the second quarter, Reliance Retail opened 9 stores in the city of Mumbai. Reliance Fresh stores were also opened in Warangal, Dhanbad, Jamshedpur, Alluva, Kollam, Thrissur, Amritsar and Chandigarh.

The most valued company of all the listed companies in India, Reliance Industries traded down 4.25%, ahead of the earnings release to 2,575.9 rupees. Stock reached record high of 2,805 in the intra-day trading to reach a total market capitalization of 4 trillion rupees or $100 billion.

[R]12:30PM New York, 10:00PM Mumbai - Sensex decline for the second day in row and trading volume perks up.[/R]

Sensex shares fell 3.8% in Mumbai as the market faced selling towards the end of the session.

In Mumbai, stocks traded sideways in the morning session on speculation that the National Stock Market had raised some futures & options margins which were later declined by the sources at the NSE.

The Bombay Stock Exchange 30-share Sensex lost 3.8% or 717.4 to 17,998.40. The S&P CNX Nifty ended down 3.6% or 208 to 5,351.

Of the 30 shares of the Sensex, 7 gained while the remaining declined. Of the BSE stocks 1,027 advanced, 1,707 declined, while 326 remained unchanged. The trading volume on the BSE increased to 11,570 crore rupees and on the NSE rose to 26,030.25 crore rupees.

Larsen & Toubro said it has won four orders worth 452 crore rupees for projects in Andhra Pradesh. The company secured 226 crore rupees order from NTPC for Simhadri Coal Handling Plant while the other three contracts worth 226 crore rupees were from Public Health and Municipal Engineering Department of Andhra Pradesh.

Of the Sensex index 30 shares ACC led the decliners with a fall of 13.7% to 1,036 rupees after it reported 30.14% rise in net profit to 292.42 crore rupees. Bharti Airtel declined 7.67% to 1,019.4 rupees.

Reliance Communications lost 3.51% to 711.5 rupees after the company said it added 1.5 million subscribers in September 2007.

Reliance Industries was down 4.25% to 2,575.9 rupees. It had hit an all-time high of 2,805 earlier during the day, hitting the 4 trillion rupees. The stock had gained 4.3% in the morning session to become the first Indian company to reach this level.

Reliance Industries Limited reported first half net income increase of 31% to 7,467 crore rupees on the revenue increase of 9% to 64,692 crore rupees. Exports in the period increased 11% to $9.3 billion. Earnings per share increased to 51.40 rupees from 39.30 rupees.

Increase in revenue was due to 5% increase in prices and 4% growth in volume. During the period under review, aggregate exports were higher by 11% at Rs. 37,074 crore (US$ 9.30 billion).

During the half year period ended 30th September 2007, the refinery processed 16.1 million tons, an increase of 3%. It achieved an operating rate of 98%. Petrochemicals production grew by 7% to 9.8 million tons, against 9.1 million tons for the corresponding period of the previous year.

The outstanding debt as on 30th September 2007 was Rs 28,607 crore (US$ 7.18 billion) compared to Rs 27,826 crore as on 31st March 2007. Net gearing as on 30th September 2007 was 23.0% as compared to 25.2% on 31st March 2007.

Reliance Retail Lmited ended the second quarter with 329 Reliance Fresh stores in over 30 towns and cities. Towards the end of the second quarter, Reliance Retail opened 9 stores in the city of Mumbai. Reliance Fresh stores were also opened in Warangal, Dhanbad, Jamshedpur, Alluva, Kollam, Thrissur, Amritsar and Chandigarh.

ICICI Bank lost 7% to 1.038.8 rupees, HDFC Bank slid 5.5% to 1,379.2 rupees, State Bank of India shed 8.3% to 1.677.5.

Tata Steel retreated 3.8% to 836.2, Sterlite industries shed 1.6% to 890.4, Steel Authority of India lost 6.45% to 23.3 rupees and Hindalco Industries was down 5.56% to 187.

DLF shed 5.85% to 843.55 rupees, Indiabulls Real Estate lost 7.86% to 532.2 rupees and Unitech shed 3.2% to 330.4 rupees.

NTPC retreated 5.6% to 208.5 rupees, Power Grid Corporation of India lost 2% to 133.6 rupees, Reliance Energy shed 9.7% to 1,591.35 rupees) and Tata Power Company slid 8.27% to 1,078.8%.

Of the Sensex stocks, TCS rose 2.17% to 1,118.90 after India's top software services exporter secured a $1.2 billion 10-year contract from information and media firm Nielsen Co. to provide IT services.

Wipro gained 2.17% to 496.50 rupees and Satyam Computer Services climbed 16% to 462.6 rupees. Ranbanxy Laboratories rose 0.4% to 421.85 rupees. The company today reported third quarter profit increase of 72.8% from a year ago.

Asian stocks gained for the first time in three days. Japan led the advancers. Japan's Nikkei 225 Stock Average gained 0.9% to 17,106.09 and Hong Kong's benchmark hit 30,000. The Singapore, Indonesia, Thailand and New Zealand benchmarks fell.


[R]11:00AM New York – Stocks in early trading decline in New York after weaker than expected earnings.[/R]

In the early trading in New York stocks fell o rising oil, weak dollar, and weaker than expected earnings from Bank of America and Pfizer.

The Labor Department reported that the jobless claims rose 28,000 to 337,000 at the end of the last week. The index of leading economic indicators rose 0.3% to 137.9 in September after a revised 0.8% decline in August.

The largest increases in initial claims for the week ending Oct. 6 were in California (+6,317), Georgia (+3,255), Kentucky (+3,159), New York (+3,094), and Illinois (+2,865), while the largest decreases were in Louisiana (-468), North Carolina (-436), Maryland (-416), Texas (-223), and Kansas (-154).

Dollar fell to a record low against euro. In the early morning trading dollar fell to $1.43002 before recovering to $1.427008. Investors are worried that slowing economy may force the Fed to lower interest rates hurting the dollar. In Tokyo, former Finance Minister Eisuke Sakakibara said that dollar could face severe decline in the year 2008 if the U.S. economic growth slows to 1%. IMF lowered the U.S. economic growth projection to 1.9% from 2.8% and worried that housing market may act as a drag on the economy.

Bank of America reported earnings decline of 32% on 12% decline in revenue in the third quarter.

Pfizer ((PFE)) reported third quarter earnings of $761 million or 11 cents per share compared to $3.36 billion or 46 cents per share a year ago. The results included pre-tax charge of $2.8 billion related to insulin inhaling product Exubera. Revenue in the quarter fell 2% to $11.99 billion and pharmaceuticals sales declined 4%.

Nokia reported third quarter profit of 1.56 billion euros compared to 845 million euros a year ago on revenue rise of 28% to 12.9 billion euros. Shipments of handsets increased 26% to 111.7 million and averages selling price fell to 82 euros from 90 euros.

After the market close yesterday, eBay ((EBAY)) reported third quarter sales increase of 30% but earnings declined on the account of $1.39 billion charge related to Skype. Operating earnings in the quarter increase to 41 cents but net income fell to a loss of 69 cents. The company reported net loss of $938 million. PayPal net revenue jumped 34% to $470 million and at Skype increased 96% to $98 million. EBay marketplace revenue increased 26% to $1.32 billion but listing declined 5% to 556 million.

Ebay fell 6% or $2.44 to $38.16 at 11:00 AM in New York.

[R]10:00AM New York – Bank of America is the latest bank to report losses from mortgage lending and trading activities.[/R]

Bank of America Corporation today reported third quarter net income declined 32 percent to $3.70 billion from $5.42 billion a year earlier. Diluted earnings per share fell 31 percent to $0.82 from $1.18. Several analysts had expected earnings between $1.01 and $1.03 per share on revenue of $17.95 billion. Revenue and earnings decline was sharper than expected by analyst. The stock in the early trading fell 3.5%.

Investment banking fees declined $1.33 billion and provision for loan losses including losses related to home equity and residential mortgage loans were $865 million.

The diversified mix of the bank’s business helped bank to stay profitable in the quarter. Retail deposits increased 4% to $16.52 billion, first mortgage origination rose 27%, and loans and leases in business lending division increased 9% to $240 million. Total asset under management increased to $710 billion after the purchase of U.S. Trust.

Revenue net of interest expense on a fully taxable-equivalent basis declined 12 percent to $16.30 billion from $18.49 billion in the third quarter 2006.

Noninterest income fell 24 percent to $7.31 billion from $9.60 billion in the third quarter of 2006. The decrease was mainly due to trading account losses of $1.46 billion and the absence of a gain on the sale of the company's operations in Brazil recognized in the third quarter of last year. The decrease was partially offset by the absence of a $469 million loss on the sale of debt securities a year earlier and improvements in investment and brokerage services and equity investment income.

Provision for credit losses was $2.03 billion, up from $1.81 billion in the second quarter of 2007, and $1.17 billion in the third quarter of 2006. Net charge-offs were $1.57 billion, or 0.80 percent of total average loans and leases. This compared with $1.50 billion, or 0.81 percent, in the second quarter of 2007 and $1.28 billion, or 0.75 percent, in the third quarter of 2006.

Total shareholders' equity was $138.51 billion at September 30. Period-end assets were $1.6 trillion. The Tier 1 capital ratio was 8.22 percent, down from 8.52 percent at June 30, 2007 and 8.48 percent a year ago due to the impact of the U.S. Trust acquisition.

During the quarter, Bank of America paid a cash dividend of $0.64 per share. The company also issued 9.5 million common shares related to employee stock options and ownership plans and repurchased 9.6 million common shares. Period-ending common shares issued and outstanding were 4.44 billion for the third quarter of 2007, compared with 4.44 billion for the second quarter of 2007 and 4.50 billion for the third quarter of 2006.

The on-going U.S. housing market correction has hobbled some of the largest banks and brokerage companies in the world. Most banks had denied that they had exposure to subprime lending. In the last one month total of $25 billion losses related to mortgage securities have been declared by banks in the U.S., Europe, and Japan.

Bank of America ((BAC)) fell at the opening $2.00 to $48.02. In the last 52 weeks stock has traded between $46.52 and $55.08.


[R]6:00AM New York, 7:00PM Tokyo-Tokyo surges 0.89% on resurgent financial stocks. IMF lowered Japan’s economic growth rate to 2% in 2007 and to 1.7% in 2008.[/R]

In Tokyo trading Nikkei 225 rose 0.89% or 150.78 to 17, 106.09, while the broad Topix Index gained 1.67% to 1,610.94. Banks recovered on renewed optimism among investors despite steady stream of losses from the U.S. banks in the mortgage securities. Mizuho Financial increased 3.8%, Mitsubishi UFJ added 2.3%, and Nomura edged 1.5%.

Of the Nikkei 225 stocks 151 gained, 62 declined and 12 were unchanged. Sumitomo Chemical Company led advancers with a rise of 7.34%, followed by Hitachi Zosen climbing 5.38% on Indian stocks recovery. Financial stocks gained on easing concerns on losses associated to the global financial turmoil. Resona Holdings firmed 4.30%. Mitsubishi UFJ rose 2.26% and Mizuho Financial Group edged up 3.78%

In the first section of the Tokyo Stock Exchange 7.7 billion shares valued at 1.1 trillion yen were traded and in the second section 171 million shares valued at 4 billion yen were traded.

The International Monetary Fund yesterday downwardly revised Japan’s economic growth projection for 2007 by 0.6% to 2.1% due to the weaker-than-expected second quarter GDP growth for 2008. Japan’s GDP shrank to an annualized rate of 1.2% in the second quarter.

The Fund in its semi-annual World Economic Outlook report acknowledged that Japanese banks exposure to U.S. subprime mortgage crisis was much more limited than those in Europe, adding the Bank of Japan needs to maintain a “supportive” monetary policy framework to stave off deflation.

IMF said Japan needed strong fiscal adjustment to ensure sustainable decline in public debt and recommended broadening of the income tax base, raising the 5% consumption tax, strengthening tax administration, and advancing structural reforms.

Crude oil price retreated from $89 per barrel to trade at $87.57 per barrel after the weekly report on energy inventory showed a rise in levels in the U.S.

News reports said today Mitsubishi UFJ and Sumitomo Mitsui Financial Group and Credit Saison plan to bid for Japan Airlines credit card unit JAL Card Inc, which is, valued at 100 billion yen. Credit Saison will ally with Mizuho Financial Group in the bid open until the end of October. JAL to reduce its debt by 12% and become profitable is selling non-core assets including the credit card business.

Of the Nikkei 225 index shares, Sumitomo Chemical Company led gainers with a rise of 7.34% followed by gains in Hitachi Zosen of 5.38, in Kumagai Gumi Corp of 4.97%, in Kawasaki Heavy Industries of 4.94% and Asahi Glass Corp of 4.72%.

Of the Nikkei 225 Index stocks, Nippon Paper Group led the decliners with a fall of 3.52%, followed by losses of 2.98% in Sompo Japan Insurance, 2.65% in Konami Corp, 2.42% in Hokuetsu Paper and 2.41% in Millea Holdings.

Shipbuilders gained after the Indian government assured investors that it would not end trading in participatory notes use by hedge fund investors but will require investors to register with regulatory authorities. Kawasaki Heavy Industries rose 4.94%.

Kawasaki Heavy Industries also gained after reporting first half profit of 16 billion yen after the yen weakened against the dollar, averaging 119 yen per dollar over the covered period.

Elpida and other semiconductor stocks gained on Nikkei News reports that the company reported that the company will use 300 mm silicon wafer to produce DRAM chips by March next year. Advantest Corp rose 0.54%.

Mixi Inc. soared 15% to 1.35 million yen after reporting first-half net income of 950 million yen, up 150% from a year ago earnings of 440 million yen.

Retailers declined on the expectations of weak retail sales. Seven & I Holdings tumbled 2.21%, Takashimaya shed 0.47% and Mitsukoshi lost 0.19%.