Qapco contributed 48% of IQ net profit in 2013 compared with 42% a year ago.
By Santhosh V Perumal/Business Reporter
Higher sales volumes and prices of LDPE (low density polyethylene) helped Qatar Petrochemicals (Qapco) outshine its parent company Industries Qatar (IQ) in profitability in 2013.
Other subsidiaries as Qatar Fertiliser (Qafco) saw profit increase amid reduced revenue and Qatar Steel saw profit fall amid earning rise.
Qapco’s profit rose 7% to QR3.82bn and Qatar Steel by 21% to QR1.7bn, whereas that of Qafco fell 30% to QR2.42bn.
IQ net profit had fallen 5% to QR8.01bn in 2013.
Qapco contributed 48% of IQ net profit in 2013 against 42% a year ago, followed by Qafco 30% (41%) and Qatar Steel 21% (17%).
Qapco revenue grew 12% to QR5.35bn and Qafco by 3% to QR6.15bn, whereas that of Qatar Steel fell 5% to QR5.82bn.
Qapco contributed 31% to IQ’s total revenue against 28% in the previous year, followed by Qafco 36% (35%) and Qatar Steel 34% (36%).
Qapco’s performance was largely due to significant improvement in sales after the commercial launch of its third LDPE plant in the second half (H2) of 2012 and subsequent quick ramp-up and improved LDPE prices.
Total LDPE sales volume increased year-on-year by 33.7% and overall utilisation was 103%.
Resilient petrochemical prices contributed QR200mn to the year-on-year segment growth of QR600mn. Commodity price inflation was most notable for LDPE and methanol, registering 8% and 13% growth respectively in 2013, as they continued to recover from the near-term lows noted in H2 2012.
LDPE benefited from short supply from the Middle East and Asia due to maintenance shut-downs and/or reduced production levels on high input costs, coupled with strong demand from core Asian derivative markets.
Methanol prices grew primarily due to a tightening of the demand-supply gap in 2013 following strong Chinese demand and competitor plant outages.
However, petrochemical EBITDA (earnings before interest taxes depreciation and amortisation) margin was lower at 75.6% as higher LDPE-3 operating costs and reduced other operating income negated the positive impact of increased LDPE and fuel additive sales volumes, and a 26.6% improvement in profits in Qapco’s 63.64% joint venture, Qatofin.
Qafco saw moderate rise in revenues on incremental urea sales volumes after the commercial launch of fifth and sixth units in H2 2013, but subsequent ramp-up was largely negated by urea prices, which continued their negative trend, in line with international prices.
Finding weak nitrogenous fertiliser price outlook, IQ said although a significant recovery in fertiliser prices is not expected imminently, it is in a uniquely strong position to weather the current downturn in global fertiliser prices.
Fertiliser EBITDA margin deteriorated to 53.9% on a significant fall in prices and increase in the average feedstock unit cost owing to revision in the natural gas supply and purchase agreement rates for trains 1 to 4, and incremental supply to train 5.
Qatar Steel’s fall in revenue was due to a 5.4% drop in the weighted average re-bar price. Its full year EBITDA margin improved to 32.9% due to several factors including improved iron ore pricing, a superior sales mix and enhanced results from associates.
