HE al-Sada: Successful completion of shut-down plan.
Market heavyweight Industries Qatar – a holding company for Qatar Petrochemicals (Qapco), Qatar Fuel Additives (Qafac), Qatar Fertiliser (Qafco) and Qatar Steel - has reported a 38% fall in net profit to QR1.59bn in the first quarter of this year.
The net profit decline was mainly on account of a series of extensive, planned major maintenance shut-downs across all segments.
“The successful and timely completion of a significant proportion of the group’s 2014 shut-down plan is an important development as it provides assurance to shareholders of the importance senior management place on regular and thorough maintenance of the group’s assets. We look forward to the balance of the year as we complete the remaining major shut-downs, and re-start and ramp-up facilities,” HE the Minister of Energy and Industry, who is also IQ chairman, Dr Mohamed bin Saleh al-Sada said.
IQ chief coordinator Abdulrahman Ahmed al-Shaibi said the muted year-on-year financial results can be primarily attributed to reduced sales volumes following extensive planned preventive maintenance and warranty shut-downs in the majority of the group’s key facilities, and tightened operating margins on increased selling expenses and annual cost inflation, which were partially mitigated by the commercial launch of Qatar Steel’s QR1.2bn EF-5 facility.
Qapco revenue fell 14% to QR1.5bn due to extensive, planned shutdowns across all plants in the segment: ethylene plants lost an average of 36 days per plant, versus planned downtime of 35 days; low density polyethylene (LDPE) units an average of 29 days per plant against a plan of 34 days; and the linear low density polyethylene facility lost 18 days in comparison to a plan of 11 days, following the general shut-down.
Qafac recorded a total of 27 days of downtime across its methanol and methyl tertiary-butyl ether plants following routine, planned maintenance, compared to a budget of 18 days.
In total, the segment recorded an adverse volume variance of QR0.3bn and a 93,000 MT reduction in sales volume.
Product prices, however, were buoyant with strong demand and global supply limitations particularly aiding LDPE, which registered a 9.9% year-on-year increase; and methanol, which closed at a 5-year high of $476 per MT.
Qafco’s revenue shrank 27% to QR1.4bn, primarily attributable to a 20% decline in sales volumes as its two largest production units, trains 5 and 6 underwent mandatory, warranty-related shut-downs in the period.
Downtime in the first quarter was largely in line with budgeted expectations, with the trains’ ammonia and urea units losing 43 days and 33 days respectively, against a budget of 40 days each.
Lost production from trains 5 and 6 was, however, partially mitigated by heightened utilisation in the segments’ remaining 4 trains, with segmental utilisation.
IQ benefitted in the first quarter from a global rebound in fertiliser prices, with urea surging by over 30% from a 2-year low of $293 per MT in the previous quarter to $382 per MT in the current period, al-Shaibi said.
Qatar Steel revenue declined 21% to QR1.3bn as the benefit of the launch and initial ramp-up of the new EF-5 facility on the first quarter’s results was muted by 69 days of downtime, following routine maintenance in the segment’s Qatar-based plants, and strong prior year comparatives.
Total assets of IQ were valued at QR31.87bn, comprising current assets of QR7.63bn and non-current assets of QR24.24bn.
Total equity stood at QR28.77bn on a capital base of QR6.05bn and earnings-per-share was QR2.62 at the end of March 31, 2014.