MPHC posts 2020 net profit of QR532mn on revenues of QR2.4bn
March 04 2021 10:56 PM
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Group continues to benefit from the supply of competitively priced ethane feedstock and fuel gas und
Group continues to benefit from the supply of competitively priced ethane feedstock and fuel gas under long-term supply agreements

SP, Doha

* Group continues to benefit from the supply of competitively priced ethane feedstock and fuel gas under long-term supply agreements

Mesaieed Petrochemical Holding Company (MPHC), one of the region’s premier diversified petrochemical conglomerates, has reported net profit of QR532mn on revenues of QR2.4bn in 2020.
The board has recommended a cash dividend of QR503mn, equivalent to QR0.04 per share and representing a payout ratio of 94% of 2020 net profits.
Although the year-on-year net earnings and revenues were impacted, the fourth quarter net profit and revenues were up 3% and 37% compared to the third quarter of the same year.
There have been signs of gradual recovery of the global economy in the later part of the year, with notable recoveries in product prices on the back of crude price rebound, continuous unprecedented stimulus announcements while lifting of lockdowns in major markets, supplemented by notable optimism around the vaccine roll-out.
MPHC responded by leveraging its inherent strengths: its competitive advantage of having uninterrupted, long-term access to competitively priced feedstock; low operating cost base; stronger liquidity position; and its sales and marketing partnership with a leader in chemical product marketing and distribution which improved group’s access to global markets.
During the year, selling prices declined by 12%, while sales volumes fell by 5% compared to last year, both translating into a decrease in revenue by 17%. Production dropped by 9% amid periodic turnaround and maintenance shutdowns during the year.
The group continued to benefit from the supply of competitively priced ethane feedstock and fuel gas under long-term supply agreements. These contracting arrangements are an important value driver for its profitability in a competitive market environment.
Total assets stood at QR16.1bn and there was robust liquidity position with closing cash and bank balances of QR1.7bn at end of December 31, 2020.
“Despite momentous macroeconomic challenges, we remained resilient and continued to implement our business strategy to contain cost and specifically implemented operating expenditure and capital expenditure optimisation measures," said Ahmad Saif al-Sulaiti, MPHC chairman.
Given the current volatile market and macroeconomic outlook, MPHC kicked off several cost optimisation initiatives during the year as an additional layer to the existing optimisation programmes of each operating entity.
During the year, the petrochemical segment reported revenue of QR1.8bn and net profit amounted to QR454mn in 2020.
Revenue and earnings were impacted by the overall 7% drop in sales volumes and 13% in selling prices. The reduction in sales volumes was primarily due to the planned periodic turnaround of Q-Chem II facilities in the first quarter of 2020, while drop in crude prices coupled with softening demand for petrochemical products arising from the current macroeconomic backdrop affected the selling prices.
The production volumes dropped 11% due to the periodic planned turnaround, which are necessary to maintain the plant life and ensure HSE (health, safety and environment) standards.
The chlor-alkali segment revenue was QR617mn. The decline in revenue was attributed to the decrease in sales volumes by 2% and selling prices by 8%. Sales volumes fell due to the planned shutdown of facilities.
The drop in selling price was against a backdrop of well-documented macroeconomic slowdown during 2020, which affected the industry globally, a MPHC spokesman said, adding the segment reported QR125mn net profit despite 6% fall in the production volumes due to the periodic planned shutdowns.
 
 



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