Industries Qatar (IQ) yesterday reported a net profit of QR1.5bn for the first three months ended March 31, 2021, a 478 percent increase compared to QR300m for the same period in 2020.

IQ said its latest financial report registered the Group’s highest quarterly profit since 2016, fueled by growth in product prices on the back of improved macroeconomic sentiments. IQ’s revenue also increased by 28 percent to reach QR4.2bn during the first quarter of the year compared to QR3.3bn during the same period last year (assuming proportionate consolidation).

Earnings per share (EPS) stood at QR0.24 for Q1-2021 compared to QR0.04 for Q1-2020. EBITDA increased by 173 percent and reached QR1.9bn for the first three months this year compared to QR700m for the same period in 2020.

During the first quarter of the year, macroeconomic environment continued the upward trajectory at a global scale that was manifested first during Q4-2020. The GDP driven renewed consumer optimism following the vaccine rollout, easing of lockdowns in major markets, together with continued fiscal support to boost economies by many sovereigns, were some of the primary catalysts in the economic recovery leading to a renewed demand for commodities.

Also, the supply shortages remained evident throughout the period across all the industrial sectors, especially the petrochemicals. IQ, which reported improved OPEX savings, also recorded an 8 percent reduction in the Group’s operating expenses compared to Q1-2020.

Compared to Q4-2020, the Group’s revenue improved by 27 percent, while the net profits improved by 43 percent. The key contributor towards the growth was the overall increase in average selling prices, which continued their positive trajectory on the back of improved macroeconomic sentiments and supply challenges.

Selling prices increased by 27 percent in Q1-2021 versus Q4-2020.

The Group’s financial position remains robust, with the liquidity position at the end of March 31 reaching QR9.6bn in form of cash and bank balances, after accounting for a QR2.0bn dividend payout for the financial year 2020.

Currently, the Group has no long-term debt obligations. IQ’s total assets and total equity reached QR35.7bn and QR33.2bn, respectively, during the first quarter of 2021. During the period, the Group generated positive operating cash flows of QR2.0bn, with free cash flows of QR1.8bn.

The Group’s operations continue to remain efficient with total Group production for the first quarter of 2021 reaching 3.8 million MTs, down by 20 percent compared to Q1-2020. This reduction in production was mainly driven due to Group’s decision to mothball part of its steel facilities, since the start of Q2-2020 for strategic reasons.

Additionally, the production was also impacted by the commercial shutdown at the MTBE facilities for a period from December 2020 until February 2021.

Moreover, certain fertiliser facilities (trains 1-4) were on a planned shutdown during Q1-2021, amid focus on preventive maintenance.

The Group’s improved financial performance was largely attributable to the improvement in product prices, improvement in sales volumes, and improved OPEX savings. Product prices on average increased by 21 percent compared to Q1-2020, translating into an increase of QR1.0bn in the Group’s bottom line earnings.

Improvement were noted across most of the segments, with fertiliser segment reporting the highest contribution of QR500m, while petrochemical segment reported a contribution of QR400m.

Sales volumes also rose by 16 percent compared to the same period last year. The performance of the Petrochemicals segment improved with a net profit of QR608m for Q1-2021.

This notable increase in profits was primarily driven by improved products prices with sustained recovery in the petrochemical prices. Blended product prices in the segment rose by 41 percent compared to the same period in 2020 with polyethylene (LDPE) prices showing a marked improvement of over 56 percent.

Sales volumes marginally increased by 2 percent, while the growth in product prices coupled with sales volumes led to an overall rise in revenue by 45 percent within the segment, to reach QR1.4bn for the current period.

The Fertiliser segment reported a net profit of QR595m for the first quarter of the year, with over 200 percent increase compared to the first quarter of last year.

This increase was mainly driven by growth in revenues which increased by 55 percent in Q1-2021 compared to Q1-2020, to reach QR1.6bn. Selling prices also improved by 39 percent, which reflected positively on the segmental performance, leading to improvement of EBITDA margins.

Sales volumes also increased by 55 percent. Production within the segment was down by 10 percent compared to Q1-2020, as Qafco trains 1-4 underwent higher days of maintenance shutdowns during the first quarter of the year.

The steel segment continued its profit-making trajectory after having a difficult first half of 2020 and following the strategic restructuring initiatives implemented.

The net profit for the current period amounted to QR259m compared to a net loss of QR88m in Q1-2020. Selling prices improved by 20 percent during the current period due to increase in demand, along with higher raw material costs internationally.

Mothballing of certain steel facilities allowed the segment to primarily focus on profitable domestic market, which led to adjust its cost base.

Moreover, due to the improvement in the international prices, the segment was also able to sell some of the quantities outside the domestic market.

Industries Qatar will host an IR Earnings call with investors to discuss the results, business outlook and other matters on May 3 at 1:00pm Doha Time.

The IR presentation that accompanies the conference call will be posted on the ‘financial information’ page within the Investor Relations section of IQ’s website.

To view the source of this news, please click (here)