IQ Declares First Half Profit of QAR 4.6 Billion

Doha, July 29 (QNA) - Industries Qatar ("IQ" or "the group"; QE: IQCD), one of the regions industrial giants with interests in the production of a wide range of petrochemical, fertilizer and steel products, announced its financial results for the six months ended June 30, 2013 with net profit of QR 4.6 billion. In comments after the groups third Board of Directors meeting for 2013, HE the Minister of Energy and Industry, Chairman and Managing Director of Industries Qatar Dr. Mohamed Bin Salih Al-Sada, stated, "IQ has followed up on the record-breaking full year results in 2012 with its second highest half-yearly earnings on record. Net profit for the six months ended June 30, 2013 was QR 4.6 billion, a significant improvement of QR 0.5 billion over the same period of 2012, as the group benefitted from an additional 2.0 million MT of urea and 240,000 MT of LDPE production capacity following the launch during 2012 of QR 12.8 billion of new facilities." Continuing, HE Dr. Al-Sada said, "On behalf of the Board of Directors, I would also like to congratulate the management and staff of our steel subsidiary for the successful bid by Qatar Steels recently launched associate, SOLB Steel, for the supply of reinforced bars for the prestigious Holy Mosque Expansion Project in Makah, Saudi Arabia. The fact that such an important undertaking will be entrusted to a company that has been in operation for less than one year, is an enormous compliment to the management expertise, experience and professionalism of Qatar Steel and its associate, SOLB Steel. It is worth noting that the tender has very exacting technical specifications, requiring the company to produce reinforced bars of a quality and strength not previously manufactured in the region." For his part Chief Coordinator, Industries Qatar, Abdulrahman Ahmad Al-Shaibi stated commenting on the financial results, "The robust year-on-year financial results can be primarily attributed to strong sales volumes following the launch of the groups new facilities in the petrochemical and fertilizer businesses, and resilient petrochemical and steel margins." He added that the reported revenue for the six months ended June 30, 2013 was QAR 3.1 billion, a decrease of QAR 0.2 billion, or 7.1percent, on the restated results for the same period of 2012; however, on a like-for-like basis under the previous accounting standard, reported revenue would have been QAR 9.9 billion, an increase of QAR 0.8 billion, or 8.8 percent. The revenue of the Petrochemical Segment in the first half of the year was QR 2.4 billion, up QR 0.3 billion, or 12.0%, versus the same period of 2012, Al-Shaibi said adding that Petrochemical revenue for the second quarter of 2013 was QR 1.1 billion, down QR 0.1 billion, or 9.0%, on the previous quarter. The negative variance can be attributed to a combination of a softening in Low-density Polyethylene (LDPE) and the Methyl tert-butyl ether (MTBE) prices, and moderately weaker volumes following the unplanned LDPE and MTBE shut-downs (15 days and 20 days respectively). The segment closed the quarter with an overall utilization rate of 98 percent (2013 Q1: 104 percent). The fertilizer segment, Al-Shaibi noted, closed the six month period ended June 30, 2013 with revenue of QAR 3.5 billion, up QAR 0.8 billion, or 29.9 percent, on the first half of 2012. The segments positive quarterly performance was due exclusively to incremental urea sales volumes following the commercial launch of QAFCO 5 and 6 during the second half of the previous year. Year-on-year, an additional 750,000 metric ton (MT) of urea was sold, representing an annual increase of almost 55 percent. Commenting on the weak Nitrogenous fertilizer price outlook, Al-Shaibi said, "IQ is in a uniquely strong position to weather the current downturn in global fertilizer prices that has seen the groups quarterly weighted average urea price drop by almost 25 percent since the current commodity cycle high of USD 487 / MT in the third quarter of 2011. Firstly, and most importantly, urea capacity has increased by an additional 2.0 million MT / PA, meaning that the group can continue to expect strong headline results as improved sales volumes should be able to compensate for all but the most severe and prolonged period of price deflation. So, while lower urea prices weighed down on first half revenue by QR 0.4 billion, improved urea volumes added a significant QR 1.2 billion. And secondly, the group should benefit from the improved marketing expertise of the State of Qatars wholly-owned petrochemical and chemical marketing specialist company, Muntajat, following the transfer of all sales-related activities in the first quarter. It should also be noted that year-to-date realized urea prices are in line with the 2013 budget, and production levels have been maintained within historical norms." Chief Coordinator, Industries Qatar Abdulrahman Ahmad Al-Shaibi said that the first half steel revenue was QAR 3.1 billion, a decrease of QAR 0.2 billion, or 7.1percent, on the same period of last year, while second quarter sales totaled QAR 1.4 billion - down QAR 0.2 billion, or 14.4 percent, over the first quarter of 2013. The year-on-year and quarter-on-quarter variances were both negatively impacted by lower Direct reduced iron (DRI) / Hot-briquetted iron (HBI) sales volumes (around -110,000 MT and -45,000 MT respectively), as the groups steel subsidiary reserved strategic DRI / HBI stocks in anticipation of next quarters planned maintenance downtime for the DRI plant. On the subject of the groups bottom line, Al-Shaibi remarked, "The group recorded highly creditable half yearly earnings of QAR 4.6 billion, an improvement of more than 13 percent on the same period of 2012, and only QAR 25.1 million off the highest ever profit for the first six months of the year. In contrast to the record results of the first half of 2008 when net profit was driven by rampant commodity price inflation, the earnings of this reporting period were entirely volume driven, and came against the back-drop of tighter petrochemical and fertilizer operating margins, and several key product prices at near-term lows, he added. These resolute results serve to vindicate the previous decisions of the Board of Directors to invest heavily in improving the efficiency of existing facilities and in expanding capacity, and lend support to the future investment plans as outlined in the recently announced group growth strategy, Al-Shaibi said, expressing the group's confidence that the net impact of unifying the marketing efforts of chemical and petrochemical producing entities and creating a national champion is in the best, long-term interests of Industries Qatar, its shareholders and the State. On the consolidated earnings he said that earnings before interest, taxes, depreciation and amortization (EBITDA) for the six months ended June 30, 2013 was QAR 4.7 billion, an increase of QAR 0.5 billion, or 12.5 percent, on the same period last year, explaining that the net profit for the first half of 2013 was QAR 4.6 billion, an improvement of QAR 0.5 billion, or 13.2 percent, against the corresponding period of 2012. Significant incremental depreciation and finance charges following the capitalization of the new fertilizer and petrochemical assets in 2012 accounted for the additional movement in net profit in relation to EBITDA. Versus the previous quarter, net profit changed in line with EBITDA, he added. (END)