Industries Qatar (IQ) – the holding company of Qatar Petrochemical, Qatar Steel and Qatar Fertiliser – has reported five-fold jump year-on-year in net profit to QR1.5bn in the first quarter (Q1) of 2021, its highest quarterly profit since 2016.
The net earnings were fuelled by growth in product prices on the back of improved macroeconomic sentiments. The group revenues witnessed a more than 28% jump to QR4.2bn in Q1, 2021.
The product prices on average inclined by 21% year-on-year, translating into an increase of QR1bn in group’s bottom line earnings. The improvement was noted across most of the segments, with the fertiliser segment reporting the highest contribution of QR0.5bn, while the petrochemical segment reported a contribution of QR0.4bn.
Earnings-per-share amounted to QR0.24 in Q1, 2021 versus QR0.04 the same period in 2020.
The group’s financial position remains robust, with the liquidity position at the end of March 31, 2021 reaching QR9.6bn in form of cash and bank balances, after accounting for a QR2bn dividend payout for the financial year 2020.
At present, the group has no long-term debt obligations. The group’s total assets and total equity reached QR35.7bn and QR33.2bn, respectively, at the end of March 31, 2021. During the period, IQ generated positive operating cash flows of QR2bn, with free cash flows of QR1.8bn.
The performance of petrochemicals segment improved with a net profit of QR608mn for Q1, 2021. This notable increase in profits was primarily driven by improved products prices with sustained recovery in the petrochemical prices.
The blended product prices in the segment grew 41% year-on-year with a robust 56% improvement in polyethylene (LDPE) prices. Sales volumes marginally up by 2%, compared to the same period last year.
The growth in product prices coupled with sales volumes led to an overall rise in revenue by 45% within the segment, to QR1.4bn for the current period.
The production volumes were marginally up year-on-year, as the segment had higher operating days during the quarter, as the segment was on a planned periodic maintenance for some of its key facilities during Q1, 2020.
Although, during Q1, 2021, the MTBE (methyl tertiary-butyl ether) production volumes were impacted due to the commercial shutdowns, but it was entirely offset as some of the polyethylene facilities were on maintenance during Q1, 2020.
The fertiliser segment reported a three-fold jump in net profit to QR595mn for Q1, 2021. This increase was mainly driven by growth in revenues which increased by 55% in Q1-21 versus Q1-20, to reach QR1.6bn.
Selling prices also improved by 39% versus Q1, 2020, which reflected positively on the segmental performance, leading to improvement in the EBITDA (earnings before interest taxes depreciation amortisation) margins.
Sales volumes increased by 55%. The production within the segment was down by 10%, as Qafco trains 1-4 underwent higher days of maintenance shutdowns during the period as compared to the same period last year.
The steel segment reported net profit of QR259mn versus a net loss of QR88mn in the year-ago period. Selling prices improved by 20% during the current period due to increase in demand, along with higher raw material costs globally.
"Mothballing of certain steel facilities allowed the segment to primarily focus on profitable domestic market, which led to adjust its cost base. Moreover, due to the improvement in the international prices, the segment was also able to sell some of the quantities outside the domestic market," IQ said.
By changing the raw material mix, the segment reduced it costs without affecting quality of the final product, it added.