IQ reports net profit of QR2.1bn in January-June 2023

Market heavyweight Industries Qatar (IQ) – the holding entity of Qatar Petrochemicals, Qatar Fertilisers and Qatar Steel – has reported net profit of QR2.1bn in the first half (H1) of 2023.However, net profit declined 62% on an annualised basis with the macroeconomic environment continuing to remain challenging during the first half of 2023 as geopolitical uncertainty persisted; along with recessionary fears linked to hawkish monetary policies resulted in subdued demand for most commodities.The group’s operations continue to remain strong as production volumes for the current period improved by 3% year-on-year to 8,362mn metric tonnes. Earnings per share (EPS) stood at QR0.35 for H1-2023 compared to QR0.90 the year-ago period.IQ’s financial position continue to remain robust, with cash and bank balances remaining at QR14.9bn as of June 30, 2023, after accounting for a dividend payout relating to the financial year 2022 amounting to QR6.7bn. Currently, the group has no long-term debt obligations.The group’s reported total assets and total equity reached QR40bn and QR37.4bn, respectively, at the end of June 30, 2023. It generated positive operating cash flows of QR2.8bn, with free cash flows of QR1.7bn during H1-2023.The petrochemicals segment reported a net profit of QR825mn, down 45% on a yearly basis, mainly linked to a 28% decline in revenues, which was mainly affected by lower blended selling prices realised during H1-2023.Blended product prices for the petrochemical segment declined by 28% against same period of last year, as result of overall decline in global petrochemical prices due to combined effect of declining crude prices and weakened consumer demand against a backdrop of deteriorating macroeconomic fundamentals.Sales volumes remained relatively flat compared to H1-22. On the other hand, production volumes slightly improved by 2% against the backdrop of slightly improved facility availability.Fertiliser segment reported a net profit of QR723mn, registering a significant 78% decline on an annualised basis, primarily on 53% contraction in segmental revenue in line with 53% fall in selling prices, amid macro-challenges affecting nitrogen-based fertiliser markets globally. On the other hand, sales volumes remained relatively flat compared to the first half of 2022.Steel segment reported a net profit of QR278mn, down 55% versus last year. Lower segmental earnings were mainly driven by lower revenues, which decreased by 4% versus H1-22.The earnings were also impacted by higher volume related operating expenses, and marginally reduced other operating income. The combined effect of lower prices and increased operating expenses resulted in a notable decrease segment’s profitability.Decline in revenue was primarily driven by lowered selling prices which declined by 18% on year-on-year basis. This was partially offset by higher sales volumes which increased by 18% mainly linked to higher production volumes.