Improved operating performance led market heavyweight Industries Qatar (IQ) to report a net profit of QR2.7bn, translating into QR4.5 earnings-per-share, on revenues of QR3.4bn in the first nine months of this year. “The reported results can be considered highly competitive as the group operated in a highly challenging macro-economic and competitive market environment,” said IQ, the holding entity for Qatar Petrochemicals, Qatar Fertiliser, Qatar Steel and Qatar Fuel Additives.
However, net profit declined 29% year-on-year, mainly on lower revenues due to price deflation across all segments, most notably in fertiliser.
Nevertheless, the revenue fall was somewhat offset by improved operating costs, following its optimisation strategy, IQ said, adding operational key performance indicators remained firm with a utilisation rate of 104%.
The financial position also continued to remain solid with cash holdings at QR10.6bn; while total debt was QR3.2bn, down QR0.6bn against that in December 31, 2015.
Revenues fell 16% due to a fall in the prices of steel, together with lower sales volumes because of lower demand and absence of sales of certain intermediate products.
All segments operated under “uncertain” market conditions that have been prevailing for the last 12 to 18 months, thereby hampering its operations due to several variables, including price volatility and excess supply of end products in the key markets, IQ said, adding product prices in all segments continued to remain weak – most notably, in fertilisers and fuel additives.
Nevertheless, the group was able to witness stable production and sales volumes together with improved operating costs, thereby “significantly” exceeding its budget expectations, an IQ spokesman said.
Fertiliser prices continued to remain weak due to a combination of factors as current and expected level of elevated supplies, weaker demand, and currency depreciation in some fertiliser exporting countries.
Nevertheless, fertiliser sales volumes were marginally up on last year in line with the flat year-on-year production, IQ said.
Similarly, prices in the steel segment were also slightly down on 2015 due to muted demand in the major regional markets following the decision to reduce capital expenditure, together with availability of low priced steel from the non-Gulf producers, most specifically China and Turkey, it said.
Prices during the current year however continued to remain “stable” with minimal quarterly movements. Sales volumes were down on last year in line with the lower demand and the absence of sales of certain intermediate products in the current year. But the impact of reduced sales volumes and prices were more than offset by improved operating costs.
Prices of polyethylene products have remained “stable” after recovering substantially from their lowest level in early 2016.
“The demand for the petrochemical products appears to be promising with renewed interest shown in some key markets together with the tightening of supply due to delays in launching new capacities,” according to IQ.
Together with improved market dynamics and higher polyethylene production, the group was able to increase sales volumes vis-à-vis last year.
The polyethylene production improved “moderately” on the previous year as some of the key facilities were on maintenance during the last year. On the other hand, fuel additive prices and sales volumes were down last year.