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DOHA: Industries Qatar (IQ), one of the region’s industrial giants with interests in the production, distribution and sale of a wide range of petrochemical, fertiliser and steel products, announced its financial results for the year ended December 31, 2012, with revenue of QR18.7bn and net profit of QR8.4bn.
In comments issued to the Qatar Exchange after the group’s first Board of Directors meeting for 2013, H E Dr Mohammed bin Saleh Al Sada (Pictured), Minister of Energy and Industry and Chairman and Managing Director of Industries Qatar, said: “The close of the financial year ended December 31, 2012, marked the end of an era for Industries Qatar. The group has now completed 10 years since its IPO in 2003 and, with revenue of QR18.7bn and net profit of QR8.4bn, registered its best financial results on record.
“Over this period, IQ successfully fulfilled its core mandates of consolidating and managing a central component of economic diversification of the value added chain in Qatar, and secondly, ensuring a wide cross-section of Qatari nationals can benefit from the State’s substantial gas reserves. Net profits have grown from QR 1.1bn in 2003 to QR8.4bn in the year ended December 31, 2012, with total assets increasing from QR8.7bn to QR40.2bn over the same period.
The group’s operations have increased to include new products, new markets and facilities in new geographies. And, the Owners’ Equity has increased from QR 5bn at the inception to exceed QR 30bn by the end of 2012.
“The previous financial year was also noteworthy as it witnessed the launch of the group’s remaining major CAPEX projects, namely Qafco 5 and 6, and LDPE-3.” The strong year-on-year financial results can be primarily attributed to strong sales volumes following the launch of the group’s new facilities in the petrochemical and fertiliser businesses, and strong EBITDA margins.
The group recorded revenue of QR18.7bn for the year ended December 31, 2012, representing an increase over the same period of 2011 of 13 percent. This increase can be attributed to volume-driven growth across all segments. In line with international trends, the group experienced price weakness across its suite of key products, with the exception of methanol and MTBE where prices bucked the trend and grew by 9 percent and 5 percent respectively.
Petrochemical revenue for the year was QR6.54bn against 2011’s QR6.50bn, registering a modest 0.6 percent year-on-year positive variance. The segmental performance was primarily impacted by weak LDPE prices and lower sales volumes registered by the group’s fuel additives joint venture, and was despite the commercial launch in the third quarter of the group’s latest petrochemical expansion, LDPE-3.
The fertiliser segment closed the year with revenue of QR6bn, up QR1.7bn, or 40 percent. The segment’s full year performance was due almost exclusively to incremental sales volumes following the commercial launch of Qafco 5 and 6 during the year.
Full year steel revenue was QR6.2bn, an increase on 2011 of QR0.4bn, or 6.8 percent. The increase was all production-driven as the segment registered a volume variance of QR0.6bn, with DRI/HBI and re-bar volumes improving by 108 percent and 10 percent respectively.
Significant progress is being made on the group’s steel investment in Algeria. Qatar Steel holds a 50 percent stake in a special purpose vehicle, Qatar Steel International, which in turn has a 49 percent share in a joint venture formed with the government of Algeria and other local parties called Group Industrial Sider City Chaiba BP which was established to develop a 2 million MT/PA integrated steel mill in Algeria.
The Board of Directors approved the group’s five-year business plan for the period from 2013 to 2017.It is important to note, however, that the business plan only includes capital investments that have been approved by the Board of Directors - pipeline investments, of which the group has several at various stages of evaluation, are not included.
The Board of Directors approved a revised dividend policy confirming that IQ is targeting a consistent growth rate in the dividend over the 5-year business plan period, while maintaining adequate liquidity for the group’s capital investments, working capital and financing needs, and the principles of financial prudence. Dividends proposed by the Board of Directors are subject to general assembly approval.
The Board of Directors proposed to restructure the group’s equity by converting QR550m of retained earnings to capital. This restructuring will strengthen the group’s capital structure, reduce the disparity within shareholders’ equity, and position IQ to better support its growth aspirations. The proposal is subject to approval by the general assembly.
With respect to the dividend proposed for the year ended December 31, 2012, Al Sada said: “Since its initial public offering in April 2003, the Board of Directors has supported a progressive and generous dividend payout policy. In total, that has seen shareholders receive QR23.3bn and payout ratios averaging 57 percent.
“In consideration of the group dividend policy, the Board of Directors is pleased to recommend a total annual dividend distribution for the year ended December 31, 2012 of QR4.7bn, equivalent to a payout of QR8.50 per share and representing 85 percent of the nominal value. Based on the group’s February 21, 2013, average closing price on the Qatar Exchange, this generates a dividend yield of 5percent.”