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Satyendra Pathak
Doha
The QNB Financial Services (QNBFS) on Thursday announced that it maintains 'market perform' on Industries Qatar (IQ) as the company posted strong set of results in the second quarter of this year.
In a company report released on Thursday, QNBFS said,"The company's consolidated revenue, which represents the steel segment, came in at QR1645.37 million in the second quarter of 2018, which represents an increase of 79.4 percent year-on-year (YoY) and 19.4 percent quarter-on-quarter (QoQ). Steel was again stronger-than-expected with revenue beating our estimate of QR1,308.94 million by 25.7 percent. This was the strongest segment top-line since the second quarter of 2014."
Strength in the steel business, the report said, is partly attributable to IQ's newly minted offtake agreement with Muntajat that made up 36 percent of steel revenue for the quarter. According to the company, sales of steel products have improved due to the change in geographical mix, while increase in raw materials costs and resurgence of demand in some geographies were the key factors that contributed to the increase in steel prices in the first half of 2018.
"Petchem and fertiliser segments were broadly in-line with our model. Segment income rose to QR993.65 million, up 71.8 percent YoY and 15.7 percent QoQ. The first half sales volumes improved moderately on last year, despite a number of planned and unplanned shutdowns in some facilities. Recovery in global demand helped the fertiliser business. PE prices have started to stabilise, while fuel additive prices have improved appreciably YoY. Stable crude oil prices has acted to support the PE/FA segments. Fertiliser prices have shown a modest rise driven by tightening of supplies, and a general recovery in demand," the report said.
"We are of the view that these are a strong set of results and bottom-line performance would have been even stronger if the company did not report a loss of QR77.13mn from its steel associates along with a substantial increase in selling costs. We expect to revise our 2018 net income estimate upward given strong first half results. If we maintain the current quarterly run-rate of QR1.25 billion along with moderate growth, we can see IQ posting QR5.1 billion or so in earnings for 2018," the report said.
