By Santhosh V Perumal/Business Reporter
A double-digit growth in gains from its fertiliser business helped market heavyweight Industries Qatar (IQ) to report a 6% increase in net profit to QR8.44bn for 2012.
The company has suggested 8.5% cash dividend to be approved by shareholders at the annual general assembly scheduled on March 17.
“The group has now completed 10 years since its initial public offering in 2003 and, with revenue of QR18.7bn and net profit of QR8.4bn, registered its best financial results on record,” Energy and Industry Minister HE Dr Mohamed bin Saleh al-Sada, who is also IQ chairman, said after the board meeting yesterday.
The board also approved a five-year business plan for 2013-17, which expects net profit to remain on par with 2012 levels as moderate incremental volume and minimal price inflation are offset by rising production costs.
“The strong year-on-year financial results can be primarily attributed to strong sales volumes following the launch of the group’s new facilities in the petrochemical and fertiliser businesses, and strong EBITDA (earnings before interest taxes depreciation and amortisation) margins,” according to IQ chief co-ordinator Abdulrahman Ahmad al-Shaibi.
Qatar Fertiliser Company (Qafco) witnessed a 34% growth in profits to QR3.42bn and 40% in revenues to QR6bn. The full-year performance was due almost exclusively to incremental sales volumes following the commercial launch of Qafco 5 and 6 during the year, as key product prices improved, on average, by only 0.4%, IQ said.
Qapco (Qatar Petrochemical Company) saw a 6% fall in profit to QR3.55bn on flat revenue of QR6.55bn. The performance was primarily impacted by weak LDPE (low-density polyethylene) prices and lower sales volumes from fuel additives joint venture and was despite the commercial launch in the third quarter of the group’s latest petrochemical expansion, LDPE-3.
Qatar Steel’s profit fell 15% to QR1.40bn but amid a 7% growth in revenues to QR6.15bn. The revenue increase was all production-driven as the segment registered a volume variance of QR0.6bn, with DRI/HBI and re-bar volumes improving by 108% and 10% respectively.
The commercial launch of SOLB Steel Company in Saudi Arabia provided the group’s steel subsidiary with an assured off-take market, and re-bar volumes increased due to buoyant local and regional demand.
Direct costs grew 15% to QR8.81bn, thus resulting in an 11% growth in gross profit to QR9.88bn.
General and administrative expenses grew 34% to QR896mn, selling expenses by 27% to QR276.40mn and finance costs by 73% to QR271.23mn; even as other expenses were brought down by 59% to QR100.36mn.
Moreover, the company incurred QR150mn impairment loss on investment in Bahrain-based Gulf United Steel Holding in which IQ has a 25% stake, and another QR139.63mn loss from share of results of associates. IQ’s other associates are Qatar Metal Coating (50% stake) and Saudi Arabia-based SOLB Steel Company (31.04% holding).
Total assets were valued at QR40.21bn comprising current assets of QR15.38bn and non-current assets of QR24.83bn.
Total equity stood at QR30.70bn on a capital base of QR5.50bn and earnings-per-share was QR15.35 at the end of December 31, 2012.
On QR18.2bn Ras Laffan Petrochemical Complex, in which IQ has a 16% stake, al-Shaibi said: “The project is on track, and no changes to either the timetable, product list, shareholder names or participation are under consideration.”
About the 2013-17 business plan, IQ said accumulated capital spend over this period, consisting of routine and non-routine capex, and investments, is expected to be about QR6bn, as the group incurs initial costs related to QP-Qapco/Ras Laffan Petrochemical Complex; completes existing major capex projects, and implements a number of medium-sized upgrade, renovation and shutdown related initiatives.
“Three group companies, Qatar Fuel Additives, Qafco and a related company, Qatar Vinyl Company, will transfer relevant distribution and marketing operations to Muntajat in the first quarter of 2013. All other affected group companies are expected to transfer relevant distribution and marketing operations during the second quarter of 2013,” al-Shaibi said.
On November 22, 2012, government established Qatar Chemical and Petrochemical Marketing and Distribution Company (Muntajat) was created with the exclusive rights to purchase, market, distribute and sell Qatar’s production of chemical and petrochemical regulated products to the global market.
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