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, recorded a net profit of QR1.5bn and earnings per share of QR0.24 for the period ended June 30, 2019. This compares with net profit of QR2.5bn and earnings per share of QR0.41 for the same period of 2018.
The cash position across the group remained strong with total cash across the group of QR10.7bn after paying the 2018 annual dividend of QR3.6bn, and total debt of only QR10.9m, reflecting the group’s strong liquidity position.
During the current reporting period, the group operated under tightened trading conditions, as demand for products remained somewhat low and the product prices have softened. Product prices on average have declined by 10 percent, which has contributed for a QR0.6bn reduction in the group’s net earnings.
Overall sales volumes, on the other hand, were also slightly down on the backdrop of lower production due to periodic maintenance. However, net profit for the second quarter of 2019 increased by 16 percent to QR0.8bn compared to the first quarter of 2019. This improvement was primarily driven by a gradual recovery in product prices, most notably in the prices of polyethylene and steel products.
Reported revenue for the period ended June 30, 2019 was QR2.3bn, a marginal decrease of 24 percent, over the same period of 2018. This year-on-year reduction was due to a moderate fall in the sales volumes and prices of the group’s steel products following muted demand in the domestic market and increasing international competition.
On the other hand, on a like-for-like basis, management reporting revenue — assuming proportionate consolidation — was QR6.7bn, a decrease of QR1.5bn or 18 percent, versus the same period of 2018.
This year-on-year reduction was primarily driven by a moderate reduction in the product prices and sales volumes across all segments. Product prices were down by 10 percent on the backdrop of lower crude oil prices, while sales volumes decreased by 9 percent on account of weaker demand, periodic planned maintenance and unplanned outages.
Prices of petrochemical products were moderately down compared to the same period of 2018. A marginal reduction in crude oil prices, and muted demand in some major markets due to unfavorable economic conditions resulted in weaker petrochemical product prices. Petrochemicals sales volumes were also down last year due to periodic planned shutdowns and unplanned outages.
Fertilizer prices, on the other hand, have improved marginally compared to the same period of 2018. The increase was driven by improved demand from some of the large agricultural economies, together with increased raw material costs and regulatory pressure on non-environment compliant producers. Sales volumes, however were marginally down last year.
Prices in the steel segment were also down year-on-year due to a number of reasons, including lower demand and higher competition. In the domestic market, the prices were affected by the relatively lower demand in the current period, while the regional demand was also affected by the availability of low price steel from non-GCC producers, especially Turkey.
Prices in other markets, like the Far East, were affected by the supply of low cost steel from countries like China. The fierce international competition together with muted local consumption of steel have affected the volumes sold during the current year, and the steel sales volumes were slightly down last year.
Total debt across the group is only QR10.9m. This debt is expected to be settled during the second half of 2019. Moody’s Investor Services (MIS) has updated its credit opinion on the group and maintained A1 rating with a Stable Outlook.
