Mesaieed Petrochemical Holding Company (MPHC), one of the region’s premier diversified petrochemical conglomerates, has reported a net profit of QR330mn on total revenues of QR1.6bn in the first nine months of this year.
The year-on-year financial performance was impacted by current global macroeconomics, including unprecedented adversities amid Covid-19 outbreak. These external forces, outside the group’s control, exerted pressure on the product prices, and witnessed a decline by 20% year-on-year basis.
On quarter-to-quarter basis, the group’s revenue and net profits increased by 36% and 150% respectively, mainly attributed to the improved product prices in the current quarter.
“Despite distressed market conditions, we remained resilient and continued to implement our business strategy to contain cost and specifically implemented operational expenses and capital expenditure optimisation measures in order to negate the challenges arising out of the pandemic and weaker economic environment," said Ahmad Saif al-Sulaiti, chairman, MPHC.
The group’s sales volumes declined 11% year-on-year, driven by a combination of reasons including lockdowns of key market geographies, weaker demand and lower production due to periodic planned maintenance shutdowns.
The decline in selling prices and sales volumes, on a combined basis, contributed to a decrease of QR659mn in the net profits during the review period.
MPHC continued to benefit from the supply of competitively priced feedstock, under long-term supply agreements. These contracting arrangements are an important value driver for the group’s performance in a competitive market environment.
The feedstock cost savings on lowered unit prices and volumes contributed QR136mn to the bottom-line earnings for the nine months period.
The petrochemicals segment reported total revenue of QR1.2bn, a decrease of 30% and net profit amounted to QR237mn, with a decline of 66% compared to the same period last year.
The revenue and earnings were impacted by a drop in sales volumes by 13% and selling prices by 20%. The reduction in sales volumes was primarily due to the planned periodic turnaround of QChem-II facilities during the first quarter (Q1) of 2020, while decline in selling prices was attributed to softening demand for petrochemical products arising from the current macroeconomic backdrop.
The production volumes dropped by 13% compared to 9M-19, amid periodic planned turnarounds, which are necessary to maintain the plant life and ensure health safety and environment standards.
The chlor-alkali segment revenue declined 25% to QR377mn due to 8% fall in sales volumes and 19% in selling prices. Sales volumes were down due to the planned shutdown of the facilities in Q1-20 and non-availability of access to the core markets for chlor-alkali products, due to Coivid-19 lockdowns in the first part of the April-June this year. Accordingly, net profit shrank 70% to QR42mn.
"Looking ahead, we are well positioned to solidify our market position with a focus on generating improved shareholder returns, through leveraging our competitive advantages together with our flexibility in operations and diversified portfolios, with a leaner cost base,” al-Sulaiti said.
Liquidity remained robust as cash and cash equivalents of MPHC amounted to QR1.6bn. The total assets reached QR15.9bn at the end of September 30, 2020.
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