Industries Qatar Co. IQCD

119.52 -2.50 -2.05 %

Industries Qatar net profit surges by 56% in H1

(8/9/2018 7:37:00 AM)

Industries Qatar (IQ), one of the region’s industrial giants with interests in the production of a wide range of petrochemical, fertilizer and steel products, has reported a net profit of QR2.5bn and earnings per share of QR4.15 for the first half of 2018 (H1, 18). This compares with net profit of QR1.6bn and earnings per share of QR 2.66 for the corresponding period of 2017.

The results are also well ahead of the group budget expectations for 2018. Improved product prices, stable sales volumes, efficiently managed operating assets base and continued focus on cost improvements were the driving forces behind this impressive performance, the group stated yesterday.

The group’s sales volumes have moderately improved on last year, despite a number of planned and unplanned shutdowns in some facilities. Polyethylene sales improved through higher production, as the segment was on an extended unplanned shutdown during the first half (specifically during Q1, 2017) of 2017. Recovery in the global demand has aided the group’s fertilizer segment, while the sales of steel products have improved due to the change of geographical mix.

Product prices across most segments have moderately increased versus the same period of 2017. Polyethylene prices have started to stabilize, while fuel additive prices have improved notably compared to last year. The stability of crude oil prices has supported both polyethylene and fuel additive prices to remain strong throughout the year. Fertilizer prices have shown a modest rise driven by tightening of supplies, and a general recovery in demand. Steel prices remain strong as prices in the current year have steadily risen. Increase in raw materials costs, resurgence of demand in some geographies were the key factors those contributed to the increase in the steel prices.

The group’s financial position remains solid as cash across the group stands at QR 10.2bn after paying 2017’s dividend of QR3.0bn, and periodic debt payments amounting to QR0.3bn. Total debt across the group now stands at QR0.2bn, down from QR0.5bn as at 31 December 2017.

Revenue reported under IFRS 11 for the period ended 30 June 2018 was QR3.0bn, up significantly by 50 percent on last year. A combination of moderate improvement in sales volumes and selling prices has contributed for this significant revenue growth.

On the other hand, on a like-for-like basis, management reporting revenue - assuming proportionate consolidation - was QR8.1bn, a significant increase of 24 percent over 2017.

This increase was due to the combined effect of improved prices and volumes versus the previous year. Net Profit for the period ended 30 June 2018 saw a significant increase of QR0.9bn, or 56 percent, on the prior year. Improved prices and sales volumes versus the last year together with improved performance of the joint ventures were the driving forces behind the increased earnings for the first half of 2018.

Qatar Chemical and Petrochemical Marketing and Distribution Company, (trading as “Muntajat”) assumed responsibility to market, sell and distribute the group’s steel products with effect from 1 May 2018. With this agreement, Muntajat assumes the sole responsibility of marketing the group’s entire sales volumes. The group expect to benefit significantly from this arrangement via realizing greater synergies, cost improvements and access to a wider geographical network.

Rating agency Moody’s has affirmed its A1 rating for Industries Qatar and changed the outlook to stable from negative.

The Peninsula