By Santhosh V Perumal/Business Reporter

 

 

Market heavyweight Industries Qatar (IQ) has reported a 13% jump in its first half net profit to QR4.57bn mainly helped gains in its fertiliser and petrochemical businesses.

Revenues were otherwise down 7% to QR3.09bn despite robust gains in income from fertiliser and petrochemical businesses, according to its financial statement.

Its petrochemical unit (Qapco) reported a 10% jump in profit to QR1.79bn, fertiliser (Qafco) by 17% to QR1.76bn and steel (Qatar Steel) by 10% to QR0.99bn.

In contrast to the record results of the first half of 2008 when net profit was driven by rampant commodity price inflation, the earnings of this reporting period were entirely volume driven, and came against the back-drop of tighter petrochemical and fertiliser operating margins, and several key product prices at near-term lows, IQ said.

On the revenue side, petrochemicals and fertiliser businesses registered 10% and 30% growth to QR3.31bn and QR3.54bn; whereas that from steel fell 7% to QR3.09bn.

“The group benefited from an additional 2mn MT (metric tonnes) of urea and 240,000MT of LDPE (low density polyethylene) production capacities following the launch during 2012 of QR12.8bn of new facilities,” Energy Minister HE Dr Mohamed bin Saleh al-Sada said.

The robust 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 resilient petrochemical and steel Ebitda (earnings before interest taxes depreciation and amortisation) margins, according to IQ chief co-ordinator Abdulrahman Ahmad al-Shaibi.

Total LDPE sales volume increased by 96,000MT, or 57.2%, versus the corresponding period of 2012, despite LDPE-3 experiencing a number of minor, unplanned outages during the period.

The fertiliser segment’s positive quarterly performance was due exclusively to incremental urea sales volumes following the commercial launch of Qafco 5 and 6 during the second half of the previous year.  Year-on-year, an additional 750,000MT of urea was sold, representing an annual increase of almost 55%.

Qatar Steel’s year-on-year and quarter-on-quarter variances were both negatively impacted by  lower sales volumes (about -110,000MT and -45,000MT, respectively), as the subsidiary reserved strategic stocks for the EF5 green field steel melt shop and in anticipation of next quarter’s planned maintenance downtime for its DR-1 plant.

The parent group’s cost of sales fell faster than revenues by 11% to QR2.08bn; thereby helping IQ to report a 4% gain in gross profit to QR1.02bn.

Its other income rose 10% to QR112.14mn and share of results of joint ventures (Qatofin, Qatar Vinyl Company and Qatar Plastic Products Company) by 14% to QR3.56bn. Moreover, it made a gain of QR8.52mn as share of results of associates against loss of QR18.19mn in the previous period.

General and administrative costs were down 18% to QR77.08mn, selling expenses by 3% to QR17.49mn and finance costs by 13% to QR30.10mn.

Total assets were valued at QR33.28bn comprising current assets of QR7.51bn and non-current assets of QR25.77bn.

Total equity stood at QR30.41bn on a capital base of QR6.05bn and earnings-per-share was QR7.55 at the end of June 30, 2013.

IQ also said during the third quarter, there would be planned shutdown for five days at its LDPE plant, 24 days (ammonia), 21 days (urea) and 30 days (steel).

Reuters adds:   Petrochemical prices have strengthened in recent years, but worries persist over the impact of a global slowdown on industry earnings in the world’s top oil exporting region.

Qatar has embarked on a massive domestic building programme in preparation to host the 2022 World Cup soccer tournament, with plans to spend $11bn on a new international airport,

$5.5 billion on a deepwater seaport and $1bn for a transport corridor in the capital, Doha.

A year ago, IQ said the steel segment was expected to see “significant benefit from the progressive and wide-ranging infrastructure plans of the State of Qatar.”