Industries Qatar (IQ) posted a net profit of QR2bn for first nine months of this year ended September 30, 2019. IQ is one of the region’s leading industrial giants with interests in the production of a wide range of petrochemical, fertilizer and steel products.
The IQ’s net profit is down 47 percent year-on-year, while total revenues declined 17 percent to reach QR10.2bn (assuming proportionate consolidation). The Group’s earnings per share (EPS) stood at QR0.34 (34 dirhams) for the nine months of 2019, as compared to QR0.63 (63 dirhams) for the same period last year, and an averaged EBITDA of QR3.2bn for the nine month period ended September 30, 2019, which represents a decline of 36 percent year on year.
Business performance and outlook IQ’s business performance in the nine months of 2019 reflects challenging conditions in the region and wider international markets. The Group leveraged competitive advantage of uninterrupted access to feedstock supply, under long term supply arrangements, in addition to its partnership with Muntajat, a global leader in marketing and distribution of chemicals, fertilizers and steel products, acts a catalyst for global market access, to partially offset extreme challenges.
The financial performance was impacted by uncontrollable external factors such as the slowdown in global economies, volatility in commodity prices and the ongoing trade conflicts. These factors directly translated to an increased pressure on commodity prices and an imbalance in the supply-demand dynamics for petrochemicals, fertilizers and steel products. The product prices on average declined 11 percent year to date compared to the same period of last year, which has contributed a decrease of QR1.1bn in the Group’s financial performance for the nine months period ended 30 September 2019.
The Group’s total revenue in the third quarter of 2019, increased by 12 percent to reach QR3.6bn as compared to the second quarter of this year, while reporting a 26 percent decline in quarterly net profit as the effect of the global commodity prices fed through to the operations.
Unfavorable market conditions have also contributed to lower sales volumes, which for the nine-month period showed a 6 percent decline compared to the corresponding period in 2018. The reduction in sales volume was further impacted by planned and unplanned maintenance shutdowns during the year, which are in line with the Group’s commitment in enhancing health and safety, plant life, quality assurance and reliability, which would ultimately lead to improved operational efficiency in the long-term.
The Group’s balance sheet remained healthy with liquidity at the end of the third quarter remaining robust, including QR9bn in cash and bank balances, after accounting for a dividend payout of QR3.6bn for the financial year 2018, a testament to the Group’s strong cash flow generation. The Group’s total assets and total equity reached QR35.1bn and QR33.7bn respectively as at September 30, 2019.
Operational highlights by segment Petrochemicals: Revenue for the first nine months of 2019 saw a decline of 26 percent when compared to the same period last year. Softening demand for petrochemical products in key markets, combined with declining market prices for petrochemical products, which are closely linked to crude oil prices, contributed to the overall decrease in the revenues.
The reduction was also driven by periodic maintenance shutdowns, aimed at improving health, safety and environment standards whilst also focusing on enhancing the performance and efficiency of assets.
Fertilizer prices have remained relatively stable during the first nine months of 2019 and during the third quarter of the year. As a result, the sales volume remained relatively stable with a marginal decline of 1 percent in first nine months of 2019. The price stability of fertilizers was primarily driven by supply-demand dynamics in the global markets, where the stricter regulations imposed on large producing countries, together with stringent export restrictions, has negatively impacted the supply curve, whereas the demand side has remained soft due to its cyclical nature.
The Group’s sales volumes in the steel segment saw a moderate decline of 8 percent in the nine month period of 2019, compared to the same period last year. This is attributed to softer domestic demand due to a majority of the large infrastructure projects are at near completion stage, however, the near to medium prospects remain encouraging.
Source from: The Peninsula