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Tribune news network
Doha
Industries Qatar has reported a net profit of QR5.6 billion for the nine-month period ended September 30, 2021, representing an increase of 360 percent compared to the same period last year, the company announced in a statement on Monday.
?Group’s operations continued to remain resilient with production volumes for the nine-month reaching 11.7 million MTs, with a marginal decline of 3 percent versus same period of last year.
This was primarily driven by Group’s strategic decision to mothball part of its steel facilities since April 20, commercial shutdown at its MTBE facilities during Q1-21, coupled with planned and unplanned maintenance at fertilizer facilities. Plant utilization rates for the period reached 98 percent, while average reliability factor also stood at 97 percent.
Group revenue also improved by 76 percent to reach QR14.1 billion as compared to QR8.0 billion for nine months of 2020. Earnings per share (EPS) amounted to QR0.93 for the period versus QR0.20 for the same period of last year. EBITDA increased by 161 percent and reached to QR7.0 billion.
Group’s financial performance for the current nine-month period versus last year was largely attributed to several factors, including:
? Product price improvement
Blended product prices at Group level reached to USD 541/MT, a 43 percent increase compared to the same period of 2020, translating into an increase of QR5.3 billion in Group’s net profits. Price increase was mostly linked to elevated market prices across all the segments, with fertilizer segment reporting a contribution of QR2.8 billion, while petrochemicals segment contributed QR1.8 billion towards the overall improvement in profitability versus 9M-20. Steel segment contributed QR0.7 billion to earnings growth versus same period of last year.
? Improvement in sales volumes
Sales volumes increased by 34 percent versus last year, driven by multiple factors, including additional sales volumes relating to Qafco trains 1-4 reported as part of 9M-21 volumes, whereas the same were not reported for the first seven months of 2020, as the trains operated under a temporary gas processing arrangement during that period. Nevertheless, improvement in the sales volumes were partially offset by reduction in volumes due to mothballing of steel facilities, commercial shutdown at fuel additives facilities and Qafco’s planned & unplanned shutdowns.
OPEX
Group operating expenses increased by 25 percent versus 9M-20. This increase was attributed to higher variable cost on account of increased sales volumes and raw materials costs. On the other hand, the Group continue to benefit from the recent cost optimization initiatives implemented since the second half of 2020.
Compared to Q2-21, Group revenue and net profit remained relatively flat during Q3-21. The benefits captured from improved selling prices (+8 percent) were almost offset by reduced sales volumes, amid lower plant operating rates especially within fertilizer segment and lesser steel demand domestically due to seasonal effects. EBITDA for Q3-21 improved marginally to reach QR2.6 billion, up by 3 percent versus Q2-21.
Average selling prices improved by 8 percent mainly on account of higher urea and steel prices.
Fertilizer prices continue to improve during the quarter against a backdrop of strong demand and higher natural gas prices coupled with supply constraints. While petrochemical prices were softened from last quarter’s peak on account of enhanced supply. Steel prices remained robust on account of persistent elevated steel prices internationally.
Group’s financial position continue to remain robust, with the liquidity position as at the end of September 30, 2021 reaching QR13.4 billion in form of cash and bank balances, after accounting for a dividend payout for the financial year 2020 amounting to QR2.0 billion. Currently, the Group has no long-term debt obligations.
Group’s total assets and total equity reached QR39.7 billion and QR37.4 billion, respectively, as at 30 September 2021. During nine-month period, the Group generated positive operating cash flows of QR6.2 billion, with free cash flows of QR5.6 billion.
Segmental
performance
Petrochemical segment reported a net profit of QR2.2 billion for 9M-21, up by 248 percent versus 9M-20. This notable increase was primarily linked to improved product prices owing to better macroeconomic dynamics and supply scarcities. Profit improvement was also partially supported by the return of MTBE production to full scale, which was on a commercial shutdown for a certain period during the first half of this year.
Blended product prices for the segment rose by 62 percent versus 9M-20, with polyethylene (LDPE) prices showing a marked improvement of 67 percent. Sales volumes improved by 6 percent, compared to the same period of last year, on account of improved production levels which also increased by 6 percent. The growth in product prices coupled with inclined sales volumes led to an overall increase in revenue by 72 percent within the segment, to reach QR4.7 billion for 9M-21.
Q3-21 segmental revenue declined by 10 percent as compared to Q2-21, mainly due to a decline in average selling prices by 9 percent. Decline in topline earnings led to a quarter on quarter reduction in segment’s net earnings. Q3-21 selling prices softened compared to Q2-21, mainly on account of global supply side recoveries and improved inventory levels. Q3-21 production levels remained flat with a marginal increase of 1 percent as compared to Q2-21.
During Q4-21, polyethylene facilities are expected to be on a general shutdown for slightly over two months in order to ensure asset integrity and reliability.
Fertilizer
Fertilizer segment reported a net profit of QR2.8 billion for 9M-21, with an increase of 436 percent, versus the same period of last year. This increase was primarily driven by topline growth where revenue increased by 119 percent for the nine month period of 2021, to reach QR6.5 billion. Selling prices improved significantly by 69 percent versus 9M-20, which reflected positively on segmental performance and led to improved EBITDA margins. Restricted supply from key exporting economies, rising gas prices, production bottlenecks in some countries, together with strong demand from key crop-growing regions has been a driving force behind high fertilizer prices.
Sales volumes increased by 68 percent during 9M-21 in comparison to 9M-20, as full volumes relating to Qafco trains 1-4 were recorded as part of 9M-21, as against absence of volumes for the first seven months of 2020, amid temporary gas processing arrangement. Production within the segment remained flat compared to last year, while the operating days broadly remained in-line with last year.
Q3-21 segmental revenue increased by 21 percent as compared to Q2-21, mainly on account of continued higher fertilizer prices, which on an average increased by 24 percent quarter-on-quarter basis. This was partially offset by marginal decline in sales volumes by 3 percent in line with lower production volumes that declined by 6 percent amid unplanned shutdowns.
Growth in revenue led to a growth in segment’s net earnings which increased by 36 percent compared to Q2-21.
As part of the segment’s routine maintenance programme, a pair of trains will be on a planned maintenance for approximately 30 days during Q4-21 in line with Group’s strategy to achieve operational excellence while ensuring reliability.
Steel
Following the strategic restructuring initiatives implemented last year, steel segment returned to profitability in 2021. Net profit for the current period amounted to QR629 million versus a net loss (including impairment) of QR1.4 billion in 9M-20. This noticeable improvement was mainly due to many factors including:
? Selling prices improvement: selling prices improved by 31 percent compared to 9M-20, due to increase in demand linked to a rebound in construction activity. Iron ore prices on the other hand have continued to remain volatile with a significant price hike during the early parts of the year, followed by recent lower trajectories.
? Focused marketing: the Group now focus on selling in more profitable domestic and regional markets on its current reduced production capacity. Nevertheless, the Group also made few international sales on an opportunistic basis.
? Absence of one-off impairment expense amounting to QR1.2 billion linked to mothballing decision booked during last year, thus improving current year’s comparative performance.
? By changing the raw material mix, the segment reduced its production costs without affecting quality of the final product thus improving operating margins.
Q3-21 revenue decreased by 29 percent as compared to Q2-21, mainly due to lower sales volumes, which declined by 37 percent on a quarter-on-quarter basis amid softened demand on account of seasonal effects.
This was partially offset by higher selling prices (+13 percent). Q3-21 profitability declined by 44 percent compared to Q2-21, due to decline in revenue and realizing higher iron ore cost prices which specifically prevailed during first half of 2021.
Earnings call
Industries Qatar will host an IR Earnings call with investors to discuss the results, business outlook and other matters on Monday, November 1, 2021. The IR presentation that accompanies the conference call will be posted on the ‘financial information’ page within the Investor Relations section at IQ’s website.
Doha
Industries Qatar has reported a net profit of QR5.6 billion for the nine-month period ended September 30, 2021, representing an increase of 360 percent compared to the same period last year, the company announced in a statement on Monday.
?Group’s operations continued to remain resilient with production volumes for the nine-month reaching 11.7 million MTs, with a marginal decline of 3 percent versus same period of last year.
This was primarily driven by Group’s strategic decision to mothball part of its steel facilities since April 20, commercial shutdown at its MTBE facilities during Q1-21, coupled with planned and unplanned maintenance at fertilizer facilities. Plant utilization rates for the period reached 98 percent, while average reliability factor also stood at 97 percent.
Group revenue also improved by 76 percent to reach QR14.1 billion as compared to QR8.0 billion for nine months of 2020. Earnings per share (EPS) amounted to QR0.93 for the period versus QR0.20 for the same period of last year. EBITDA increased by 161 percent and reached to QR7.0 billion.
Group’s financial performance for the current nine-month period versus last year was largely attributed to several factors, including:
? Product price improvement
Blended product prices at Group level reached to USD 541/MT, a 43 percent increase compared to the same period of 2020, translating into an increase of QR5.3 billion in Group’s net profits. Price increase was mostly linked to elevated market prices across all the segments, with fertilizer segment reporting a contribution of QR2.8 billion, while petrochemicals segment contributed QR1.8 billion towards the overall improvement in profitability versus 9M-20. Steel segment contributed QR0.7 billion to earnings growth versus same period of last year.
? Improvement in sales volumes
Sales volumes increased by 34 percent versus last year, driven by multiple factors, including additional sales volumes relating to Qafco trains 1-4 reported as part of 9M-21 volumes, whereas the same were not reported for the first seven months of 2020, as the trains operated under a temporary gas processing arrangement during that period. Nevertheless, improvement in the sales volumes were partially offset by reduction in volumes due to mothballing of steel facilities, commercial shutdown at fuel additives facilities and Qafco’s planned & unplanned shutdowns.
OPEX
Group operating expenses increased by 25 percent versus 9M-20. This increase was attributed to higher variable cost on account of increased sales volumes and raw materials costs. On the other hand, the Group continue to benefit from the recent cost optimization initiatives implemented since the second half of 2020.
Compared to Q2-21, Group revenue and net profit remained relatively flat during Q3-21. The benefits captured from improved selling prices (+8 percent) were almost offset by reduced sales volumes, amid lower plant operating rates especially within fertilizer segment and lesser steel demand domestically due to seasonal effects. EBITDA for Q3-21 improved marginally to reach QR2.6 billion, up by 3 percent versus Q2-21.
Average selling prices improved by 8 percent mainly on account of higher urea and steel prices.
Fertilizer prices continue to improve during the quarter against a backdrop of strong demand and higher natural gas prices coupled with supply constraints. While petrochemical prices were softened from last quarter’s peak on account of enhanced supply. Steel prices remained robust on account of persistent elevated steel prices internationally.
Group’s financial position continue to remain robust, with the liquidity position as at the end of September 30, 2021 reaching QR13.4 billion in form of cash and bank balances, after accounting for a dividend payout for the financial year 2020 amounting to QR2.0 billion. Currently, the Group has no long-term debt obligations.
Group’s total assets and total equity reached QR39.7 billion and QR37.4 billion, respectively, as at 30 September 2021. During nine-month period, the Group generated positive operating cash flows of QR6.2 billion, with free cash flows of QR5.6 billion.
Segmental
performance
Petrochemical segment reported a net profit of QR2.2 billion for 9M-21, up by 248 percent versus 9M-20. This notable increase was primarily linked to improved product prices owing to better macroeconomic dynamics and supply scarcities. Profit improvement was also partially supported by the return of MTBE production to full scale, which was on a commercial shutdown for a certain period during the first half of this year.
Blended product prices for the segment rose by 62 percent versus 9M-20, with polyethylene (LDPE) prices showing a marked improvement of 67 percent. Sales volumes improved by 6 percent, compared to the same period of last year, on account of improved production levels which also increased by 6 percent. The growth in product prices coupled with inclined sales volumes led to an overall increase in revenue by 72 percent within the segment, to reach QR4.7 billion for 9M-21.
Q3-21 segmental revenue declined by 10 percent as compared to Q2-21, mainly due to a decline in average selling prices by 9 percent. Decline in topline earnings led to a quarter on quarter reduction in segment’s net earnings. Q3-21 selling prices softened compared to Q2-21, mainly on account of global supply side recoveries and improved inventory levels. Q3-21 production levels remained flat with a marginal increase of 1 percent as compared to Q2-21.
During Q4-21, polyethylene facilities are expected to be on a general shutdown for slightly over two months in order to ensure asset integrity and reliability.
Fertilizer
Fertilizer segment reported a net profit of QR2.8 billion for 9M-21, with an increase of 436 percent, versus the same period of last year. This increase was primarily driven by topline growth where revenue increased by 119 percent for the nine month period of 2021, to reach QR6.5 billion. Selling prices improved significantly by 69 percent versus 9M-20, which reflected positively on segmental performance and led to improved EBITDA margins. Restricted supply from key exporting economies, rising gas prices, production bottlenecks in some countries, together with strong demand from key crop-growing regions has been a driving force behind high fertilizer prices.
Sales volumes increased by 68 percent during 9M-21 in comparison to 9M-20, as full volumes relating to Qafco trains 1-4 were recorded as part of 9M-21, as against absence of volumes for the first seven months of 2020, amid temporary gas processing arrangement. Production within the segment remained flat compared to last year, while the operating days broadly remained in-line with last year.
Q3-21 segmental revenue increased by 21 percent as compared to Q2-21, mainly on account of continued higher fertilizer prices, which on an average increased by 24 percent quarter-on-quarter basis. This was partially offset by marginal decline in sales volumes by 3 percent in line with lower production volumes that declined by 6 percent amid unplanned shutdowns.
Growth in revenue led to a growth in segment’s net earnings which increased by 36 percent compared to Q2-21.
As part of the segment’s routine maintenance programme, a pair of trains will be on a planned maintenance for approximately 30 days during Q4-21 in line with Group’s strategy to achieve operational excellence while ensuring reliability.
Steel
Following the strategic restructuring initiatives implemented last year, steel segment returned to profitability in 2021. Net profit for the current period amounted to QR629 million versus a net loss (including impairment) of QR1.4 billion in 9M-20. This noticeable improvement was mainly due to many factors including:
? Selling prices improvement: selling prices improved by 31 percent compared to 9M-20, due to increase in demand linked to a rebound in construction activity. Iron ore prices on the other hand have continued to remain volatile with a significant price hike during the early parts of the year, followed by recent lower trajectories.
? Focused marketing: the Group now focus on selling in more profitable domestic and regional markets on its current reduced production capacity. Nevertheless, the Group also made few international sales on an opportunistic basis.
? Absence of one-off impairment expense amounting to QR1.2 billion linked to mothballing decision booked during last year, thus improving current year’s comparative performance.
? By changing the raw material mix, the segment reduced its production costs without affecting quality of the final product thus improving operating margins.
Q3-21 revenue decreased by 29 percent as compared to Q2-21, mainly due to lower sales volumes, which declined by 37 percent on a quarter-on-quarter basis amid softened demand on account of seasonal effects.
This was partially offset by higher selling prices (+13 percent). Q3-21 profitability declined by 44 percent compared to Q2-21, due to decline in revenue and realizing higher iron ore cost prices which specifically prevailed during first half of 2021.
Earnings call
Industries Qatar will host an IR Earnings call with investors to discuss the results, business outlook and other matters on Monday, November 1, 2021. The IR presentation that accompanies the conference call will be posted on the ‘financial information’ page within the Investor Relations section at IQ’s website.
