Industries Qatar (IQ) has posted a net profit of QR2bn in the first half of this year, the region’s industrial giant said yesterday.
IQ has interests in the production of a wide range of petrochemical, fertiliser and steel products.
But the H1 net profit was down QR500mn or (19%) against the same period in 2015, the company said.
The reduction in net profit was exclusively driven by the lower revenues resulting from the notable price deflation across all operating segments most notably in the fertiliser segment, IQ said.
The reduction in revenues was largely offset by the improvement in the operating costs on account of ongoing cost optimisation initiatives.
Net profit for the reported quarter (Q2) was QR1.3bn, a commendable improvement of QR600mn on Q1, 2016, or 82% driven by the improved sales volumes, better polyethylene prices and reduced operating costs.
The company maintained “strong” financial position with total assets of QR38.3bn including total cash of QR9.3bn and minimal total debt of QR3.4bn.
IQ in a statement yesterday said the group recorded “commendable” financial and operational performance across all of its operating segments on the backdrop of a challenging macro-economic environment.
All segments within the group operated under tightened market conditions similar to those experienced over the last few quarters where prices of some of the segments experienced severe setbacks – most notably, the prices of fertilisers and fuel additives.
Nevertheless, IQ said the group was able to achieve “commendable” financial and operating results with “notable” improvements in both production and sales volumes, significantly exceeding the group’s budget expectations.
Petrochemical prices have continued to recover from their 2015 lows, in line with their close correlation with the crude oil prices whilst the demand for the petrochemical products remained promising with some of the key markets having shown signs of recovery.
“Together with improved market dynamics and higher polyethylene production, the group was able to improve its sales volumes. The polyethylene production has improved on last year as some of the key facilities were on maintenance during the same period of last year. Fuel additive production, on the other hand, was somewhat impacted due to an unplanned shutdown in one of the fuel additive facilities,” IQ said.
Fertiliser prices, on the other hand, remained weak due to a combination of factors including lower production costs, weak demand, weaker currency in some fertiliser exporting countries and planned new capacity additions in some of the key supplier markets. Nevertheless, sales volumes were up on last year in line with higher production driven by lower facility maintenance in the current year.
Prices in the steel segment were also marginally down on the previous year due to muted demand in the major regional markets following the decision to reduce capital expenditure, together with the availability of cheap steel from non-GCC producers, especially China and Turkey.
Prices during the current year, however, continued to remain stable with minimal quarterly movements. Sales volumes were also down on last year in line with the lower demand and the absence of the sales of certain intermediate products in the current year, IQ said.
The group’s financial position continued to remain solid with the group holding cash in excess of QR9.3bn.
The group’s total debt amounts to QR3.4bn, down QR400mn as on December 31, 2015.
Industries Qatar QSC was incorporated as a Qatari joint stock company on April 19, 2003.
The business operations of the company comprise the direct holding of shares in the following subsidiary and joint venture companies — Qatar Steel Company (QS), a wholly-owned subsidiary, engaged in the manufacture and sale of steel billets and reinforcing bars; Qatar Petrochemical Company (Qapco), a joint venture owned 80% by IQ, engaged in the production of ethylene, low-density polyethylene (LDPE), linear low-density polyethylene (LLDPE) and sulphur; Qatar Fertiliser Company (Qafco), a joint venture owned 75% by IQ, engaged in the manufacture of ammonia and urea; and Qatar Fuel Additives Company (Qafac), a joint venture owned 50% by IQ, engaged in the production of methanol and methyl-tertiary-butyl-ether (MTBE).
IQ’s net profit for Q2 was QR1.3bn, a commendable improvement of QR600mn on Q1, 2016, or 82% driven by the improved sales volumes, better polyethylene prices and reduced operating costs.