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Tribune News Network
Doha
Mesaieed Petrochemical Holding Company (MPHC), one of the region’s premier diversified petrochemical conglomerates, on Thursday, announced a net profit of QR532 million for 2020, down by 74 percent compared to the previous year.
The Group revenue declined by 17 percent to reach QR 2.4 billion as compared to QR 2.9 billion for 2019. Earnings per share (EPS) amounted to QR0.042 for 2020, as compared to QR 0.165 in the previous year.
During 2020, selling prices declined by 12 percent, while sales volumes fell by 5 percent as compared to last year, and both translated into a decrease in revenue by 17 percent. The production dropped by 9 percent amid periodic turnaround and maintenance shutdowns during the year.
These shutdowns are part of the Group’s commitment to HSE, ensuring plant life, quality and reliability standards, which ultimately improves and maintains Group operational efficiency.
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.
Current year profitability was also impacted by impairment provisions booked during the year amounting to QR 105 million in relation to certain tax refunds.
The restatement of last year’s net profit amounting to QR885 million in relations to the booking of the effects of tax exemptions within the last year’s profitability also contributed negatively to the overall bottom line’s growth for the current year.
MPHC’s financial performance improved in the fourth quarter of 2020 as revenue grew by 34 percent to reach QR837 million, whilst the net profit increased by 3 percent when compared with the third quarter of 2020.
The growth in net earnings was mainly driven by a remarkable run in the commodity prices, driven by a persistent rebound in crude prices, along with a surge in product demand following easing out of lockdown restrictions, stimulus announcements and vaccine optimism.
MPHC’s blended selling prices increased by 15 percent on the quarter-on-quarter basis. Sales volumes also increased by 17 percent against the third quarter on account of recovery in macroeconomic sentiments leading to improved demand and better operating rates. The growth in revenues was offset by booking of one-off impairment provision booked during the fourth quarter of 2020 amounting to QR105 million in relation to certain tax refunds.
Liquidity remained robust as cash and bank balances of MHPC amounted to QR1.7 billion as at December 31, 2020. The total assets as at December 31, 2020 amounted to QR16.1 billion compared to QR16.4 billion in 2019.
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. These measures included optimising human capital structure revisions, reducing direct costs in relation to utilities and maintenance, reducing non-production related expenditures including corporate and administrative expenses.
Similarly, the producing entities reviewed their respective CAPEX programmes across and identified expenditures that can either be avoided or deferred, while ensuring HSE standards remained buoyant. The implementation of these optimisation programmes began in June 2020 and the effects of the same expected to be realised going forward.
After reviewing the year’s financial performance in light of current macroeconomic conditions, the Group’s liquidity position and future investing and financing needs, the board of directors proposed a total annual dividend distribution for 2020 of QR503 million, equivalent to a QR0.04 per share and representing a pay-out ratio of 94 percent.
During the year, the Petrochemical segment reported a revenue of QR1.8 billion, a decrease of 19 percent from 2019. Net profit amounted to QR454 million, decreased by 48 percent against last year.
Revenue and earnings were impacted by the overall drop in sales volumes which declined by 7 percent and selling prices which declined by 13 percent. The reduction in sales volumes was primarily due to the planned periodic turnaround of Q-Chem II facilities during 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.
Production volumes dropped by 11 percent due to the periodic planned turnaround, which are necessary to maintain the plant life and ensure HSE standards.
Net profit for the fourth quarter of 2020 reached QR218 million, significantly up by 40 percent compared to the third quarter of 2020.
This increase was primarily driven by improved product prices on the back of better macroeconomic
conditions.
Revenue of Chlor-alkali segment for the year declined by 9 percent compared to last year to reach QR617 million. The decline in revenue was attributed to the decrease in sales volumes by 2 percent and selling prices by 8 percent. Sales volumes fell due to the planned shutdown of facilities. Drop in selling price was against a backdrop of well-documented macroeconomic slowdown during 2020, which affected the industry globally. During the year, the segment reported a net profit of QR125 million, equivalent to a decline of 54 percent against 2019. Production volumes dropped by 6 percent due to the periodic planned shutdowns.
Commenting on the results, MHPC Chairman Ahmad Saif Al Sulaiti said, “Despite momentous macroeconomic challenges, we remained resilient and continued to implement our business strategy to contain cost and specifically implemented OPEX and CAPEX optimization measures.”
“During this year, despite the threats posed to our operations amid spread of COVID-19, we successfully implemented our planned turnarounds within the defined timelines and budget. I am pleased to announce the success of our crisis management committees, along with our marketing partner, who not only kept a check on the ever evolving business and market conditions throughout the year, but also collectively delivered commendable results and kept the business risk low, while ensuring minimal supply chain disruptions,” Sulaiti said.
“Entering 2021, we remain focused on our business strategy to solidify our market position, with a focus on generating improved shareholder returns, via leveraging our competitive advantages with a leaner cost base,” he said.
Doha
Mesaieed Petrochemical Holding Company (MPHC), one of the region’s premier diversified petrochemical conglomerates, on Thursday, announced a net profit of QR532 million for 2020, down by 74 percent compared to the previous year.
The Group revenue declined by 17 percent to reach QR 2.4 billion as compared to QR 2.9 billion for 2019. Earnings per share (EPS) amounted to QR0.042 for 2020, as compared to QR 0.165 in the previous year.
During 2020, selling prices declined by 12 percent, while sales volumes fell by 5 percent as compared to last year, and both translated into a decrease in revenue by 17 percent. The production dropped by 9 percent amid periodic turnaround and maintenance shutdowns during the year.
These shutdowns are part of the Group’s commitment to HSE, ensuring plant life, quality and reliability standards, which ultimately improves and maintains Group operational efficiency.
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.
Current year profitability was also impacted by impairment provisions booked during the year amounting to QR 105 million in relation to certain tax refunds.
The restatement of last year’s net profit amounting to QR885 million in relations to the booking of the effects of tax exemptions within the last year’s profitability also contributed negatively to the overall bottom line’s growth for the current year.
MPHC’s financial performance improved in the fourth quarter of 2020 as revenue grew by 34 percent to reach QR837 million, whilst the net profit increased by 3 percent when compared with the third quarter of 2020.
The growth in net earnings was mainly driven by a remarkable run in the commodity prices, driven by a persistent rebound in crude prices, along with a surge in product demand following easing out of lockdown restrictions, stimulus announcements and vaccine optimism.
MPHC’s blended selling prices increased by 15 percent on the quarter-on-quarter basis. Sales volumes also increased by 17 percent against the third quarter on account of recovery in macroeconomic sentiments leading to improved demand and better operating rates. The growth in revenues was offset by booking of one-off impairment provision booked during the fourth quarter of 2020 amounting to QR105 million in relation to certain tax refunds.
Liquidity remained robust as cash and bank balances of MHPC amounted to QR1.7 billion as at December 31, 2020. The total assets as at December 31, 2020 amounted to QR16.1 billion compared to QR16.4 billion in 2019.
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. These measures included optimising human capital structure revisions, reducing direct costs in relation to utilities and maintenance, reducing non-production related expenditures including corporate and administrative expenses.
Similarly, the producing entities reviewed their respective CAPEX programmes across and identified expenditures that can either be avoided or deferred, while ensuring HSE standards remained buoyant. The implementation of these optimisation programmes began in June 2020 and the effects of the same expected to be realised going forward.
After reviewing the year’s financial performance in light of current macroeconomic conditions, the Group’s liquidity position and future investing and financing needs, the board of directors proposed a total annual dividend distribution for 2020 of QR503 million, equivalent to a QR0.04 per share and representing a pay-out ratio of 94 percent.
During the year, the Petrochemical segment reported a revenue of QR1.8 billion, a decrease of 19 percent from 2019. Net profit amounted to QR454 million, decreased by 48 percent against last year.
Revenue and earnings were impacted by the overall drop in sales volumes which declined by 7 percent and selling prices which declined by 13 percent. The reduction in sales volumes was primarily due to the planned periodic turnaround of Q-Chem II facilities during 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.
Production volumes dropped by 11 percent due to the periodic planned turnaround, which are necessary to maintain the plant life and ensure HSE standards.
Net profit for the fourth quarter of 2020 reached QR218 million, significantly up by 40 percent compared to the third quarter of 2020.
This increase was primarily driven by improved product prices on the back of better macroeconomic
conditions.
Revenue of Chlor-alkali segment for the year declined by 9 percent compared to last year to reach QR617 million. The decline in revenue was attributed to the decrease in sales volumes by 2 percent and selling prices by 8 percent. Sales volumes fell due to the planned shutdown of facilities. Drop in selling price was against a backdrop of well-documented macroeconomic slowdown during 2020, which affected the industry globally. During the year, the segment reported a net profit of QR125 million, equivalent to a decline of 54 percent against 2019. Production volumes dropped by 6 percent due to the periodic planned shutdowns.
Commenting on the results, MHPC Chairman Ahmad Saif Al Sulaiti said, “Despite momentous macroeconomic challenges, we remained resilient and continued to implement our business strategy to contain cost and specifically implemented OPEX and CAPEX optimization measures.”
“During this year, despite the threats posed to our operations amid spread of COVID-19, we successfully implemented our planned turnarounds within the defined timelines and budget. I am pleased to announce the success of our crisis management committees, along with our marketing partner, who not only kept a check on the ever evolving business and market conditions throughout the year, but also collectively delivered commendable results and kept the business risk low, while ensuring minimal supply chain disruptions,” Sulaiti said.
“Entering 2021, we remain focused on our business strategy to solidify our market position, with a focus on generating improved shareholder returns, via leveraging our competitive advantages with a leaner cost base,” he said.
