Industries Qatar posts 37% jump in Q1 profit to QR1.3bn

Improved prices and sales volumes helped market heavyweight Industries Qatar — a holding entity of Qatar Petrochemicals, Qatar Fertiliser and Qatar Steel — report a robust 37% year-on-year increase in net profit to QR1.3bn in the first quarter of 2018.

The earnings-per-share amounted to QR2.1 in the first three months of this year, compared to QR1.53 in the corresponding period of 2017.

The group reported impressive operational and financial performance with revenues and net profit improving over the last year and last quarter, a spokesman said, adding higher product prices versus last year's, stable sales volumes, and continued focus on cost management were the driving factors of this commendable performance.

Revenue was QR1.4bn, up significantly on last year. A significant price uptick in the group’s steel products was the contributing reason for this notable increase.

On the other hand, on a like-for-like basis, management reporting revenue — assuming proportionate consolidation — was QR4bn, a moderate increase over 2017. Both prices and volumes were the driving factors contributing to this increase.

The group’s sales volumes have moderately improved on last year's amidst 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 quarter of 2017. Recovery in the global demand has aided the group’s fertiliser segment, while the sales of steel products improved due to the change of geographical mix.

The product prices across most segments have moderately elevated on last year, it said, highlighting that polyethylene prices have continued their recovery and have started to stabilise; while fuel additive prices have improved notably on last year.

"The stability of crude oil prices has supported both polyethylene and fuel additive prices to remain strong," he said, adding fertiliser prices have also shown a modest rise driven by tightening of supplies, and a general recovery in demand.

Steel prices have soared compared to the previous year and previous quarter. Increase in raw material costs and short supply of some consumables were the key factors that contributed to the increase in steel prices.

The group’s financial position remains solid as cash across the group stands at QR8.8bn after paying 2017’s dividend of QR3bn, and periodic debt payments amounting to QR0.1bn. Total debt across the group now stands at QR0.4bn, down from QR0.5bn as on December 31, 2017.

The spokesman said the group has signed an off-take agreement with Qatar Chemical and Petrochemical Marketing and Distribution Company (Muntajat) to market, sell and distribute the group’s steel products with effect from May 1, 2018.

The group expects to benefit significantly from this arrangement via realising greater synergies, cost improvements, and access to a wider geographical network. With this agreement, Muntajat assumes the sole responsibility of marketing the group’s entire sales volumes.