Mesaieed Petrochemical Holding Company (MPHC) has reported a net profit of QR135mn on revenues of QR975mn in the first half (H1) of this year.
The profitability and revenues were down 56% and 37% on yearly basis due to the deteriorating global macroeconomic uncertainty, slowing gross domestic product growth, trade conflicts, Covid-19 and volatile oil prices, thus weighing on the demand for MPHC products and resulting in 24% decline in selling prices.
The group’s sales volumes were down 17% year-on-year, driven by a combination of reasons including lockdowns of key market geographies, weaker demand and lower production on periodic planned maintenance shutdowns.
Its earnings-per-share (EPS) was QR 0.011 during January-June this year compared to QR0.024 for the same period in 2019.
The petrochemicals segment reported 78% decline in net profit to QR82mn on 38% fall in revenues to QR743mn as sales volumes and selling prices were down 19% and 23% respectively.
In the case of chlor-alkali, the segment saw 93% plunge in net profit to QR5mn on 34% shrinkage in revenues to QR232mn as sales volume and selling prices fell 13% and 24% respectively during the review period.
However, the group continued to benefit from the supply of competitively priced ethane feedstock and fuel gas under long-term supply pacts. These arrangements are an important value driver for the group’s profitability in a competitive market environment.
Lower feedstock costs on account of decline in feedstock volumes due to planned shutdowns and lowered unit prices positively contributed by QR121mn to the net profits for the six months period ended June 30, 2020, as compared to the same period last year.
"Despite of distressed market situation, we remained resilient and continued to implement our business strategy to strengthen our market position, while driving cost optimisation programmes and preserving shareholder value," said Ahmad Saif al-Sulaiti, MPHC chairman.
Given the current sluggish market and macroeconomic outlook due to the spread of the pandemic, MPHC has initiated several cost optimisation initiatives, where it reviewed the operating expenditures, across all segments, and identified expenses which are not critical in the current circumstances.
These measures included optimising human capital structures, reducing direct costs in relation to utilities and maintenance, reducing non-production related costs including corporate and administrative expenses.
Similarly, the company reviewed its capital expenditure programmes across all the segments and identified those expenditures that can either be avoided or deferred, while ensuring health safety and environment standards remained buoyant.
The company’s liquidity position continued to remain robust as cash and bank balances amounted to QR1.5bn. Total assets stood at QR15.7bn at the end of June 30, 2020.
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