Doha: Industries Qatar (IQ), one of the region’s industrial giants with holdings in petrochemical, fertilizer and steel producers, reported a net profit of QR204m for the first quarter of 2020, a decrease of 70 percent compared to QR674m for the same period in 2019.
IQ’s reported total revenues for the first three months ended March 31, 2020 stood at QR3.0bn (assuming proportionate consolidation), a decrease by 13 percent, compared to QR3.5bn for the same period last year. The group’s earnings per share (EPS) stood at QR0.03, compared to QR0.11 for the same period last year.
Financial performance during the first quarter of 2020 was severely impacted by several external factors including the global pandemic, significant weaker oil prices and a general decline in demand owing to slowdown in GDP growth and industrial activity. These adverse conditions directly translated into declining commodity prices and caused product prices to fall. Product prices on average have declined by 2 percent which has contributed for a QR262m reduction in the group’s net profits.
Overall sales volumes for the first quarter reached 1.9 million MT, an 18 percent decrease compared to the same period last year. The cash position across the group remained strong with total cash across the group of QR 8.9bn, after paying the 2019 annual dividend of QR2.4bn.
The group’s net cash and bank balance including proportionate share of joint ventures reached QR10.9bn for the first quarter, with total assets and total equity at QR33.4bn and QR32.0bn. The group is currently free from debt obligations.
The group generated positive operating cash flows of QR1.1bn (with free cash flow of QR922m). Total production for the current period reached 4.0 million MT, marginally up compared to the same period last year. The group’s operating facilities maintained efficiency with an average reliability factor reaching 98 percent, amid focus on preventive maintenance.
Performance of petrochemicals segment remained under pressure, with a net profit of QR123m, a 60 percent decrease compared to the same period last year, which was primarily driven by weaker products prices, weaker economic activities in key markets, and lower sales volumes on account of planned maintenance in one of the polyethylene facilities.
The fertiliser segment on the other hand, reported a net profit of QR148m, a 29 percent decrease compared to the same period last year. Selling prices were down by 15 percent partly due to present unfavourable market conditions.
The steel segment reported a net loss of QR88m, and a net profit of QR62m for the same period in 2019, which was mainly due to lower selling prices which declined by 3 percent and an increase in operating costs.
Starting from the second quarter of 2020, IQ Group will temporarily resize its capacity of domestic operations within the steel segment to 0.8 million MT of rebar with an intent to cater to local sector demand only, amid higher competition and declining margins internationally.
In a statement, H E Saad Sherida Al Kaabi, Chairman of the Board of Directors and Managing Director of IQ, said: “Despite difficult times for businesses globally, our operations remained resilient and responded effectively to the challenges posed by the current turbulent business conditions. The group companies established crisis management committees to monitor the fluctuating business conditions and threats posed by the spread of COVID-19, with specific focus on protecting its employees, assets and operations.
Our marketing partner, is closely monitoring the situation in our key markets, as the pandemic evolve, and acting prudently to minimise the disruptions to marketing, warehousing and logistics. IQ’s competitive advantages together with our flexibility in operations and diversified portfolios, remained critical to the group’s response to these external challenges and aided to balance out our performance. Cost efficiency and operational excellence is now needed more than ever, and IQ is already well positioned given the cost efficiency programmes it has undergone in the recent years. Going forward, we are putting stricter measures to optimise operating and capital expenditure across the group which will ensure our resilience and adjust ourselves to the evolving market dynamics.”
IQ will host an IR earnings call with investors to discuss the results, business outlook and other matters on April 23, 2020 at 12:30pm Doha Time. The IR presentation, accompanied by the conference call, will be posted on the publications page of the group’s website.
