Saturday, September 19, 2020
banner
Home /  Business  /  MPHC posts QR135 mn in H1 net profit

MPHC posts QR135 mn in H1 net profit

MPHC posts QR135 mn in H1 net profit

Tribune News Network
Doha
The Mesaieed Petrochemical Holding Company (MPHC) on Thursday said it recorded a net profit of QR135 million on revenues of QR975 million (assuming proportionate consolidation) for the first six months of the year.
While the net profit dived 56 percent from the same period last year, revenues declined 37 percent.
This translates to earnings per share (EPS) of QR 0.011 for H1, as against QR0.024 for the same period last year.
In a statement issued on Thursday, MPHC said its financial performance was impacted by the deteriorating global macroeconomic uncertainty, slowing GDP growth and trade conflicts, including COVID-19 and volatile oil prices.
“(The factors) continue to weigh on the demand for MPHC products and resulted in declining selling prices, which declined by 24% as compared to the same period last year,” it said.
Ahmad Saif Al Sulaiti, Chairman of the Board of Directors, MHPC, said, “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.”
He said in the first half of 2020, as MPHC successfully implemented planned preventive maintenance shutdowns within the defined timelines and budget.
The period also saw the group’s sales volumes declining 17 percent from H1, 2019, driven by a combination of reasons including lockdowns of key market geographies, weaker demand, lower production on periodic planned maintenance shutdowns.
The decline in selling prices and sales volumes, on a combined basis, contributed to a decrease of QR 574 million in the net profits for the six months period ended 30 June 2020, as compared to the same period last 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 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 QR121 million to the net profits for the six months period ended June 30, 2020, as compared to the same period last year.
Compared to the first quarter of 2020, MPHC revenue declined by 11 percent, while net profit increased by 37 percent.
The selling prices declined by 12 percent, as the impact of COVID-19 and the present oil price crisis was felt in the prices in Q2-20.
Sales volumes improved by 1 percent mainly due to improved production volumes which increased by 33 percent.
The Q2-20 profitability was also impacted by excess tax payment over provision in Q-Chem II for 2019, recorded during Q2-20, amounting to QR37 million, which contributed positively to the bottom line profitability.
In the latter part of Q2-20, there were some signs of gradual recovery in the global markets, on the back of continuous unprecedented economic stimulus package by various Governments and lifting of lockdown in major markets.
The impact of the gradual recovery of the global economy, has not been fully factored in the Company’s financial and operational results, as most economies started to show signs of recovery only during the latter part of Q2-20. On the same lines, the oil prices also began to recover only from June 2020.
However, the risk of COVID-19 pandemic still persists and has not been fully eliminated, which may hamper the early signs of recoveries.
The company’s liquidity position continue to remain robust as cash and bank balances of MHPC as at 30 June 2020 amounted to QR1.5 billion. The total assets amounted to QR15.7 billion as at 30June 2020, compared to QR 16.4 billion as at 31 December 2019.
MPHC’s business performance during the first half of 2020 continued to be impacted by the declining selling prices against a backdrop of challenging macroeconomics, which affected MPHC performance since 2019. The negative macroeconomic environment was further amplified during the period, due to the outbreakof the COVID-19 pandemic, affecting the consumer and industrial demand due to lockdowns, together with the decline in the crude oil prices.
MPHC responded by leveraging its inherent strengths: its competitive advantage of having uninterrupted, long-term access to competitively priced feedstock, and its marketing partnership with a leader in chemical product marketing and distribution, and improved Group’s access to global markets. In the current distressed situation, the dedicated marketing and sales team was able to provide MPHC an access to wider geographies in the most competitive means and thereby limiting the impact of such vulnerabilities, thereby, creating several arbitrage opportunities, including successful identification of new markets to divert the additional volumes and working closely with partners, customers and other government agencies to ensure the production, operations and sales & marketing activities remained uninterrupted.
Sulaiti, the Chairman, added, “In response to limit the spread of COVID-19 pandemic, our crisis management committees continued to ensure safety of our employees and business continuity.
“Our marketing partner, closely monitored the situation, as the pandemic situation evolved, and acted prudently to minimize the disruptions to the supply chain. MPHC has also implemented specific operating and capital expenditure optimization measures, in order to negate the negative impacts arising out of the pandemic and weaker economic environment.
“These measures will remain in place until the global economy recovers, and impacts of the pandemic are fully eradicated, in order for us to ensure our businesses continue to remain resilient and maintain its competitiveness.”

Pages