Doha: Industries Qatar (IQ or the Group), yesterday reported a net profit of QR8.1bn for the financial year ended 31 December 2021, representing an increase of 321 percent compared to last year.
Commenting on the Group’s financial and operational performance for the year, Chairman of the Board of Directors, H E Eng. Saad Sherida Al Kaabi, said: “2021 was an exceptional year where the Group has strongly risen from last year’s challenges. During this year, we captured the benefits of a solid commodity price environment, underpinned by renewed product demand. As we report a very strong performance for 2021, I would like to thank the Board of directors, Chief executive officers, senior management and all the employees of Qapco, Qafac, Qafco and Qatar Steel without whom we would not have achieved these excellent results.”
“Some headwinds amid supply chain bottlenecks persisted throughout the year, but QatarEnergy’s marketing and logistics efforts resulted in a strong support to our entities, while ensuring volumes remained unaffected without any operational disruption. Going forward, we will continue to thrive for operational excellence by focusing on our human capital and environment responsible growth. Our commitment to growth will sure not come at the expense of cost and sustainability. We will continuously be at the level of our shareholders’ confidence and create long term value,” he said.
Group’s operations remained strong with production volumes for the full year reaching 15.3 million MT’s, marginally down by 3 percent versus last year. This marginal reduction was driven by several factors including the Group’s strategic decision to mothball part of its steel facilities in April’20, major maintenance turnaround carried out at polyethylene facilities, commercial shutdown at MTBE facilities, coupled with planned and unplanned maintenance mainly at fertilizer facilities. Plant utilization rates for the year 2021 reached 96 percent, while average reliability factor stood at 97 percent.
During Q4-21, polyethylene facilities successfully concluded a major turnaround without any significant HSE incidents and encompassed most of the plants within the polyethylene business. The reduction in production volumes during Q4-21 in comparison to Q3-21 was mainly linked to polyethylene facilities’ turnaround and planned and unplanned shutdown carried within fertilizer facilities.
Group reported a net profit of QR8.1bn with growth of 321 percent versus last year. Group revenue significantly improved by 77 percent to reach a record of QR20.2bn as compared to QR11.4bn for year ended 31 December 2020. Earnings per share (EPS) amounted to QR1.34 for the year, versus QR0.32 for last year. Driven by impressive operating cash flows, EBITDA increased by 152 percent and reached to QR10.2bn.
Group’s financial performance for the year in comparison to last year was largely attributed to many factors, including: Product price improvement, improvement in sales volumes and operating expenses.
Blended product prices surged significantly by 58 percent versus last year and reached to USD 597/MT. The growth in product prices translated into an increase of QR8.5bn in Group’s net earnings.
This price increase was linked to elevated market prices across all the segments, with fertilizer segment reporting a contribution of QR5.3bn, while petrochemicals segment contributed QR2.3bn towards the overall growth in profitability versus 2020. Steel segment contributed QR0.9bn to earnings’ growth versus last year.
Sales volumes increased by 20 percent versus last year, primarily driven by additional volumes relating to Qafco trains 1-4, which operated under a temporary gas processing arrangement during the first seven months of 2020. Nevertheless, this growth in volumes was partially offset by a large turnaround carried out at the Group’s polyethylene facilities, mothballing of certain steel facilities, commercial shutdown at fuel additives facilities, and planned and unplanned shutdowns at some of the fertilizer trains.
Group operating expenses increased by 25 percent versus last year. This increase was attributed to higher variable cost on account of increased sales volumes and raw material cost inflation. On the other hand, the Group continue to benefit from the cost optimization initiatives implemented in the second half of 2020.
During Q4-21, Group revenue and net profit improved sharply versus last quarter. The benefits gained from improved selling prices were more than adequate to offset sales volumes lost due to planned maintenance and unplanned shutdowns. EBITDA for the quarter improved significantly by 23 percent to reach QR3.2bn.
Average product prices climbed by more than 33 percent primarily driven by higher polyethylene and fertilizer prices. Fertilizer prices continue to reach new highs against a backdrop of strong demand, healthy agricultural economics, lower inventory levels and export restrictions imposed by key producing countries. Petrochemical prices advanced moderately versus the previous quarter in line with higher crude prices and improved demand.
Group’s financial position continue to remain robust, with cash and bank balances at QR16.0bn as of the end of 31 December 2021, after accounting for a dividend payout for the financial year 2020 amounting to QR2.0bn. Currently, the Group has no long-term debt obligations. Group’s reported total assets and total equity reached QR42.3bn and QR39.5bn, respectively, as of 31 December 2021. Driven by strong EBITDA performance during the current financial year, the Group generated positive operating cash flows3 of QR9.4bn, with free cash flows of QR8.1bn.
Petrochemicals segment reported a net profit of QR2.5bn for the year ended 31 December 2021, up by 133 percent versus last year. This significant increase was primarily linked to improved product prices owing to better macroeconomic dynamics and supply bottlenecks. The performance of the segment was affected to an extent due to a decline in production volumes on account of a major turnaround carried out at most of the polyethylene facilities during the fourth quarter of the year.
Blended product prices for the segment improved by 55 percent versus last year, with polyethylene (LDPE) prices showing a marked improvement of 57 percent. Sales volumes, on the other hand, declined marginally due to maintenance turnaround at PE facilities and a commercial shutdown within fuel additives facilities. Segmental revenue for the year reached QR6.0bn, with an improvement of 51 percent versus last year, amid improved price environment.
Q4-21 revenue decreased by 17 percent as compared to Q3-21, mainly due to a decline in sales volumes associated with lower production at polyethylene facilities linked to the maintenance turnaround despite a marginal improvement in selling prices. Decline in revenue led to a significant reduction in net profit during Q4-21, which decreased by 55 percent versus Q3-21. Fertilizer segment reported a net profit of QR4.7bn for the year ended 31 December 2021, with an increase of 544 percent, versus last year. This increase was primarily driven by revenue growth which grew by 133 percent, to reach QR10.3bn. Selling prices improved significantly by 100 percent versus last year and reflected positively on the segmental performance and led to improved EBITDA margins.
Rising energy prices, restricted supply from key exporting economies, together with strong demand from key crop-growing regions has been a driving force behind soaring fertilizer prices.Sales volumes increased by 38 percent during 2021 versus 2020, as full volumes relating to Qafco trains 1-4 were recorded as part of 2021, as against an absence of volumes for the first seven months of 2020, amid temporary gas processing arrangement. Production within the segment slightly declined by 1 percent compared to last year. Q4-21 segmental revenue was significantly up by 39 percent compared to Q3-21, primarily on account of persistent inflationary trends in fertilizer prices, which on an average increased by 62 percent on a quarter-on-quarter basis. This was partially off-set by a 14 percent decline in sales volumes, amid lower product shipments due to commercial and logistical factors. Growth in revenue led to a growth in segment’s net earnings which increased by 76 percent compared to Q3-21. Q4-21 production volumes slightly increased by 2 percent versus Q3-21.
Industries Qatar will host an IR Earnings call with investors to discuss the latest results, business outlook and other matters on 14 February 2022 at 1:30 pm Doha Time.
