Mesaieed Petrochemical Holding Company (MPHC or the Group; QE ticker: MPHC), announced yesterday a net profit of QR909m for the six-month period ended 30 June 2021, representing an increase of 573% compared to the same period last year.
Commenting on the financial and operational performance for H1-21, Ahmad Saif Al Sulaiti, Chairman of the Board of Directors, MPHC, said “The main highlight of MPHC’s performance was a sequential macroeconomic recovery which led to a solid demand relating to basket of our products coupled with supply constraints, and resulted in an improved set of financial results.
While macroeconomic sentiments remained positive, we continued to capitalize on our robust business strategies and operational excellence. Going forward, we would continue to focus on productivity and efficiency gains while selectively invest in capital projects that would increase our competitiveness and create shareholder value.”
The economic momentum carried from the latter part of last year, on the back of satisfactory vaccination drive and easing out of geographical lockdowns in major markets, led to a sequential recovery in demand for petrochemicals and chlor-alkali products, and positively reflected on selling prices. Industry-wide supply constraints and global logistical bottlenecks also played a part in keeping the product prices favourable for the downstream producers.
MPHC’s operations continue to remain robust and resilient with total production for the period reaching 588 thousand MTs, up by 33% versus H1-20. The overall increase in production volumes was mainly attributed to improved plant operating rates in H1-21, as major planned turnarounds and preventive maintenance shutdowns were carried out at certain MPHC’s joint venture facilities during H1-20.
MPHC reported a net profit of QR909m for the six-month period ended 30 June 2021, significantly up by 573% compared to H1-20. Group revenue improved by 97% to reach QR1.9bn (assuming proportionate consolidation) as compared to QR975m for H1-20. Earnings per share (EPS) amounted to QR 0.072 for the six-month period ended 30 June 2021, compared to QR0.011 for H1-20.
During the period, blended product prices on an average increased by 57% compared to H1-20, translating into an increase of QR721m in MPHC’s bottom line earnings, compared to the same period last year.
Renewed product demand supplemented by supply constraints resulted in significant growth in commodity prices.
Sales volumes increased by 26% versus H1-20, driven by improved operating rates. The overall growth in sales volumes translated into an increase of QR238m in MPHC’s bottom line earnings.
The positive trajectory in product prices and improved volumes were slightly offset by increase in variable costs, which contributed QR191m negatively towards the H1-21 net earnings in comparison to the same period last year.
Current period net earnings were positively impacted by favorable variance amounting to QR75m, in relation to inventory differentials, due to lesser drawdowns during the period in comparison to H1-20.
Compared to Q1-21, MPHC revenue improved by 15%, while net profit significantly improved by 40%. The key contributor towards this growth was an overall increase in average selling prices, which continued their positive trajectory on the back of continued macroeconomic tailwinds.
Although, petrochemical prices have soften to an extent specifically in the later part of Q2-21 following improved supply, the overall price trend remained buoyant.
Liquidity remained robust with cash and cash equivalents reaching QR2.8bn as at 30 June 2021. Total assets as at 30 June 2021 amounted to QR16.5bn and total equity amounted to QR16.1bn as at 30 June 2021.
The petrochemicals segment reported a net profit of QR650m for H1-21, up by 702% versus H1-20. This notable increase in profitability was primarily driven by improved product prices owing to improved macro environment and supply shortages.
Sales volumes also increased by 23%, compared to the same period last year, against a backdrop of higher operating days in the current period versus H1-20.
The growth in product prices coupled with improved sales volumes led to an overall rise in revenue by 85% within the segment, to reach QR1.4bn for the current period.
Production volumes increased by 33% versus H1-20, as the segment had planned periodic turnaround of Q-Chem II facilities during Q1-20, which affected the overall operating rates for H1-20 in comparison to H1-21.
Chlor-alkali segment reported a net profit of QR252m for H1-21, increased significantly compared to the same period of last year.
This notable growth was primarily driven by a significant improvement in blended average selling prices, which increased by 82 percent versus H1-20, complemented by renewed demand of end products (PVC, aluminium, polymers) on the back of constructive macroeconomic drivers and supply shortages in certain regions.
Sales volumes also increased by 30 percent, compared to the same period last year, against a backdrop of better utilization rates in the current period versus H1-20.
The growth in product prices coupled with sales volumes led to an overall increase in revenue by 136 percent within the segment, to reach QR547m for the current period.
Production volumes rose by 32 percent versus H1-20, as the segment had more planned periodic shutdown days during H1-20.
MPHC will host an IR earnings call with investors to discuss its H1-21 results, business outlook and other matters on August 8, 2021 at 1.30pm Doha Time.
The IR presentation that accompanies the conference call will be posted on the ‘financial information’ page within the Investor Relations section at MPHC’s website.
