IQ net profit grows almost 12% to QR3.3bn

13/02/2018 06:02 AST

Industries Qatar (IQ), one of the region's industrial giants with interests in the production of a wide range of petrochemical, fertilizer and steel products, reported a net profit of QR3.3bn and earnings per share of QR5.48 for the year 2017. This compares with net profit of QR3.0bn and earnings per share of QR4.88 for the corresponding period of 2016. The group was also able to exceed the budget expectations for 2017.

The group's financial and operational performance for the year is considered credible amidst several challenges including the effect of the blockade, unplanned shutdowns in some of the facilities, a general increase in raw material costs (most specifically the cost of raw materials of steel), higher utility prices and muted demand in some geographies, IQ said here yesterday.

Despite of all these challenges, the group was able to maintain its production levels, and sales volumes, reduce the controllable operating expenditure, and marginally improve its selling prices. As a result, the group was able to outperform last year's performance by 12 percent.

The group's sales volumes have remained unchanged on last year amidst a number of unplanned shutdowns in some facilities, and muted demand in some markets. The stable sales volumes despite the challenges affirm the group's operations were robust and its ability to operate under tough trading conditions. The group's robust business continuity programs, and the timely support of our marketing partner, "Muntajat", were important factors that supported the group in maintaining its sales volumes.

Product prices have improved slightly on last year with all segments reporting improvement in prices. The petrochemical segment has shown marked recovery while the fertilizer and steel segments have shown slight improvements over the last year. Recovery and stability of the crude oil prices together with reduced supplies, most notably due to unplanned outages in some large facilities in some large economies during the second half of 2017, have contributed to the improvement in the petrochemical prices.

Fertiliser prices too have shown modest upward momentum, most specifically in the fourth quarter of 2017 due to increased demand in some of the large agricultural economies. Steel prices have moved within a narrow range during the year with prices showing positive momentum in the later part of the year. Increase in raw materials costs, short supply of some consumables together with higher demand in some destinations were the key factors in stabilizing the prices in the tail end of 2017.The group's financial position remains solid as cash across the group stood at QR10.3bn after paying 2016's dividend of QR2.4bn, and periodic debt payments amounting to QR2.4bn across the group. Total debt across the group stood at QR0.5bn, down from QR2.9bn on 31 December 2016.

The revenue reported under IFRS 11 for the period ended December 31, 2017 was QR 4.6bn, remained almost flat over the same period of 2016. The slight increase in the prices almost offset a marginal decrease in the sales volumes.

On the other hand, on a like-for-like basis, management reporting revenue - assuming proportionate consolidation - was QR14.3bn, improved slightly over 2016. A slight increase in the price across all segments was the primary reason for the revenue improvement.

The net profit reported for the year was estimated up by 12 percent on year-on-year. This favorable variance was driven by stronger financial performance across the group due to improved revenues, reduced controllable operating expenditure, and the significantly reduced major one-off items in the current year, as the group recognized a large one-off expense primarily related the impairment of QR 0.4bn at the fertilizer joint venture in 2016. Operational and financial performance is to stabilize further with the ongoing cost and operation optimization efforts.

The Board of Directors proposed a total annual dividend distribution for the year ended December 31, 2017 of QR3.0bn, equivalent to a payout of QR5 per share and representing a payout ratio of 91.2 percent.

The Peninsula