Industries Qatar Reports QR 2.0 Billion Net Profit in Q2 of 2016

Doha, August 03 (QNA) - Industries Qatar (IQ) announced its financial results for the period ended 30 June, 2016 with net profit of QR 2.0 Billion. The group recorded commendable financial and operational performance across all of its operating segments on the backdrop of a challenging macro-economic environment. All segments within the group operated under tightened market conditions similar to those experienced over the last few quarters where prices of some of the segments experienced severe setbacks most notably, the prices of fertilizers and fuel additives. Nevertheless the group was able to achieve commendable financial and operating results with notable improvements in both production and sales volumes, significantly exceeding the group's budget expectations. Petrochemical prices have continued to recover from their 2015 lows, in line with their close correlation with the crude oil prices whilst the demand for the petrochemical products remained promising with some of the key markets having shown signs of recovery. Together with improved market dynamics and higher polyethylene production, the group was able to improve its sales volumes. The polyethylene production has improved on last year as some of the key facilities were on maintenance during the same period of last year. Fuel additive production, on the other hand was somewhat impacted due to an unplanned shutdown in one of the fuel additive facilities. Fertilizer prices on the other hand remained weak due to a combination of factors including lower production costs, weak demand, and weaker currency in some fertilizer exporting countries and planned new capacity additions in some of the key supplier markets. Nevertheless, sales volumes were up on last year in line with higher production driven by lower facility maintenance in the current year. Prices in the steel segment were also marginally down on the previous year due to muted demand in the major regional markets following the decision to reduce capital expenditure, together with the availability of cheap steel from non-GCC producers especially China and Turkey. Prices during the current year however continued to remain stable with minimal quarterly movements. Sales volumes were also down on last year in line with the lower demand and the absence of the sales of certain intermediate products in the current year. The group's financial position continued to remain solid with the group holding cash in excess of QR 9.3 billion. The groups total debt amounts to QR 3.4 Billion, down QR 0.4 Billion versus 31 December 2015. Revenue reported under IFRS 11 for the period ended June 30, 2016 was QR 2.4 Billion, a moderate decrease of 16%, over the same period of 2015. This year-on-year decrease was due to a marginal decrease in the prices of the groups steel products together with lower sales volumes in line with lower demand and the absence of the sales of certain intermediate steel products in the current year. On the other hand, on a like-for-like basis, management reporting revenue - assuming proportionate consolidation - was QR 7.1 Billion, a modest decrease of QR 1.1 Billion or 13%, versus the same period of 2015. This year-on-year variance was primarily due to a general reduction in the product prices across all segments most notably in the prices of fertilizers and lower demand in some of the major economies. The impacts of reduced selling prices were partially negated by the improved sales volumes across most of the segments. The group revenue has improved on last quarter by 11% driven by impressive sales volume growth most notably in the petrochemicals and fertilizer segments, and a moderate growth in polyethylene prices. Net profit for the period under review was QR 2.0 Billion with an earnings per share of QR 3.25, down QR 0.5 Billion or 19% against the same period of 2015 (2015 EPS of QR 4.01). This reduction in net profit was exclusively driven by the lower revenues resulting from the notable price deflation across all operating segments most notably in the fertilizer segment. The reduction in revenues was largely offset by the improvement in the operating costs on account of ongoing cost optimization initiatives. Net profit for the reported quarter was QR 1.3 Billion, a commendable improvement of QR 0.6 Billion on Q1, 2016 or 82% driven by the improved sales volumes, better polyethylene prices and reduced operating costs. (QNA)