Industries Qatar posts net profit of QR700mn in first quarter
April 24 2016 08:17 PM
Qapco facilities
An aerial view of the Qapco facilities in Mesaieed.

Doha

Industries Qatar (IQ) has posted a net profit of nearly QR700mn in the first quarter of this year amid a challenging macro-economic environment.
One of the region’s industrial giants, IQ is the holding company of Qatar Steel (100% holding) and joint ventures - Qatar Petrochemical Company (80%), Qatar Fertiliser Company (75%) and Qatar Fuel Additives (50%).
The group recorded impressive financial and operational performance across all of its operating segments amidst the challenging macro-economic environment, IQ said in a statement on Sunday.
“All operating segments within the group continued to operate under tough trading conditions similar to those experienced over the last 12 to 18 months where product prices experienced severe setbacks,” IQ said.
Nevertheless, the group was able to increase its production and sales compared with the same quarter last year.
It said prices of the petrochemical products remained somewhat low compared to last year in line with their close correlation with the crude oil prices, while the demand for the petrochemical products remained muted due to unfavourable economic conditions in some of the key markets.
Petrochemicals sales volumes, however, improved on last year due to “improved production despite an unplanned shutdown” of one of the key petrochemicals facilities during the current year.
Fertiliser prices, on the other hand, were significantly down on last year due to a combination of factors including lower energy prices, lower demand, currency depreciation in some economies and expected capacity additions in some of the key supplier markets.
Sales volumes, however, were up on last year in line with higher production due to lower facility maintenance in the current year, IQ said.
Prices in the steel segment were also down year-on-year due to “muted” demand in the major regional markets following the cut on capital expenditure together with availability of cheap steel from non-GCC producers especially China and Turkey.
The group was able to maintain its sales volumes as they have marginally increased on the last year.
Cash position across the group continued to remain strong with a total cash across the group of QR8.8bn after paying the 2015 annual dividend of QR3bn, reflecting the group’s “strong liquidity position amidst stressed trading environment” and places the group on a very comfortable financial position.
IQ’s total debt of QR3.6bn was down QR200mn compared with December 2015 with debt ratios remaining solid, reflecting the group’s strong financial position, it said.
Reported revenue (under IFRS 11) for the period ended March 31 was QR1.1bn, a moderate decrease of 12.6%, over the same period of 2015.
The year-on-year reduction was due to a significant fall in the prices of the group’s steel products following the muted demand and excess supply in the key markets, despite the improved sales volumes.
The impact of reduced selling prices was partially negated by the improved sales volumes across all the segments.
Net profit for the period under review - nearly QR700mn with earnings per share of QR1.15 - was down QR300mn (or 26.7%) compared with the same period of 2015 with earnings per share of QR1.57.
“This reduction in net profit was entirely driven by the reduced revenues resulting from the notable price deflation across all segments most notably in the fertiliser segment despite a considerable improvement in the operating costs on account of ongoing cost optimisation initiatives,” IQ said.



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