Mesaieed Petrochemical Holding Company (‘MPHC’ or ‘the Group’), one of the region’s premier diversified petrochemical conglomerates, yesterday announced a net profit of QR532m for the year ended December 31, 2020. Macroeconomic headwinds continued to weigh on the business performance of the Group during the year 2020, amid slower economic growth on account of weaker crude oil environment and COVID-19 pandemic. All of this led to increased pressure on MPHC’s product prices, and negatively affected the Group’s performance for the financial year 2020.
There have been signs of gradual recovery of the global economy noted in the later part of the year, with notable recoveries in product prices on the back of crude price rebound, continuous unprecedented stimulus announcements while lifting of lockdowns in major markets, supplemented by notable optimism around the vaccine roll-out. MPHC responded by leveraging its inherent strengths: its competitive advantage of having uninterrupted, longterm access to competitively priced feedstock; low operating cost base; stronger liquidity position; and its sales and marketing partnership with a leader in chemical product marketing and distribution which improved Group’s access to global markets. In the current distressed situation, the dedicated sales and marketing team was able to provide MPHC wider access to geographies in the most competitive means and thereby limiting the impact of such vulnerabilities and creating several arbitrage opportunities. After reviewing the year’s financial performance in light of current macroeconomic conditions, the Group’s liquidity position and future investing and financing needs, the Board of Directors proposed a total annual dividend distribution for the year ended December 31, 2020 of QR503m, equivalent to a QR0.04 per share and representing a pay-out ratio of 94 percent.
The operational performance for 2020 was also impacted by planned turnaround and preventive maintenance shutdowns implemented in certain MPHC’s joint venture facilities, which caused the production volumes to decline, by 9 percent compared to last year, to reach 1 million MT. There were no plant stoppages due to any demand related reasons, nor, were there any changes to the planned maintenance timelines, amid COVID-19 spread. All of the facilities successfully completed their respective planned turnarounds within their planned timelines, with lower than budgeted CAPEX and operating expenditures. MPHC demonstrated superior operational agility by achieving its production targets, while ensuring HSE standards remained buoyant. Q-Chem and Q-Chem II improved safety processes while logging a 13th consecutive year without a single recordable incidence of heat stress.
In MPHC’s chlor-akali segment, the QVC venture completed a challenging maintenance shutdown with excellent safety results. Chairman of the Board of Directors, MHPC, Ahmad Saif Al Sulaiti, said: “Despite momentous macroeconomic challenges, we remained resilient and continued to implement our business strategy to contain cost and specifically implemented OPEX and CAPEX optimization measures. During this year, despite the threats posed to our operations amid spread of COVID-19, we successfully implemented our planned turnarounds within the defined timelines and budget.” “I am pleased to announce the success of our crisis management committees, along with our marketing partner, who not only kept a check on the ever evolving business and market conditions throughout the year, but also collectively delivered commendable results and kept the business risk low, while ensuring minimal supply chain disruptions,” he said.
“Entering 2021, we remain focused on our business strategy to solidify our market position, with a focus on generating improved shareholder returns, via leveraging our competitive advantages with a leaner cost base.” MPHC’s net profit for the year 2020 was down by 74 percent, compared to last year. The Group revenue declined by 17 percent to reach QR2.4bn (assuming proportionate consolidation) as compared to QR2.9bn for 2019. Earnings per share (EPS) amounted to QR0.042 for the financial year 2020, as compared to QR 0.165 for last year. The Group continued to benefit from the supply of competitively priced Ethane feedstock and fuel gas under long-term supply agreements. These contracting arrangements are an important value driver for the Group’s profitability in a competitive market environment. MPHC’s financial performance improved in fourth quarter (Q4) of 2020.
Revenue grew by 34 percent to reach QR837m, whilst the net profit increased by 3 percent versus the third quarter (Q3) of 2020. The growth in net earnings was mainly driven by a remarkable run in the commodity prices, driven by a persistent rebound in crude prices, along with a surge in product demand following easing out of lockdown restrictions, stimulus announcements and vaccine optimism. MPHC’s blended selling prices increased by 15 percent, quarter-on-quarter basis. Sales volumes also increased by 17 percent versus Q3 of 2020, on account of recovery in macroeconomic sentiments leading to improved demand and better-operating rates.
