Doha: Mesaieed Petrochemical Holding Company (MPHC or the Group), yesterday announced a net profit of QR1.9bn for the year ended December 31, 2021, representing an increase of 250 percent compared to last year.
Commenting on the financial and operational performance for 2021, Ahmad Saif Al Sulaiti, Chairman of the Board of Directors at MHPC said: “The main highlight for this year, was a sequential macroeconomic recovery which led us to report one of the strongest set of financial results. Despite global supply-chain headwinds, our marketing and logistics team came out strongly to steer us and insulated our activities from any operational disruptions".
“While macroeconomic sentiments remained positive, we continued our journey to capitalise on our robust business strategies and building our reputation of delivering solid results in achieving operational excellence. Going forward, we will continue to focus on productivity and achieving efficiency gains, while selectively investing in capital projects that would increase our competitiveness and create shareholder value," he added.
Group revenue improved by 62 percent to reach QR4bn, as compared to QR2.4bn for the financial year 2020. Earnings per share (EPS) amounted to QR0.148 for the year ended December 31, 2021, compared to QR0.042 in the previous year.
During the year, accelerated global GDP recovery on the back of positive macro drivers led to an increase in demand for downstream commodities. Industry supply remained tight on account of weather calamities in the US, higher energy prices in Europe, and dual policy measures in China. Global supply chain challenges remained evident throughout the year. All of these factors led to wider supply-demand imbalances across commodities and resulted in elevated commodity prices for the year.
MPHC’s operations continue to remain robust and resilient with total production for the period reaching 1,135,000 MTs, up by 9 percent versus 2020. The overall increase in production volumes was mainly attributed to improved plant operating rates during 2021, despite a planned preventive maintenance shutdown which was carried out at the chlor-alkali facilities during Q4-21. On a quarter on quarter basis, decline of 20 percent in production volumes was mainly attributed to chlor-alkali segment’s planned plant maintenance.
MPHC demonstrated superior operational agility by achieving its production targets, while ensuring HSE standards remained buoyant. Q-Chem and Q-Chem II improved safety processes while logging a 14th consecutive year without a single recordable incident of heat stress. At MPHC’s chlor-akali segment, the QVC venture completed a challenging maintenance shutdown with excellent safety results.
During the year, average blended product prices increased by 52 percent compared to 2020, translating into an increase of QR1.3bn in MPHC’s net earnings, as compared to last year.
Renewed product demand supplemented by supply constraints resulted in improved commodity prices. Sales volumes increased by 7 percent versus previous year, driven by improved plant operating rates and healthy product demand. The overall growth in sales volumes translated into an increase of QR191m in MPHC’s net earnings.
Positive trajectory in product prices and improved volumes were slightly offset by an increase in variable costs, which contributed QR282m negatively towards MPHC’s current year’s net earnings in comparison to previous year. Current year’s net earnings were positively impacted by a favorable variance amounting to QR43m, in relation to inventory differentials, due to lesser inventory drawdowns during the year in comparison to previous year.
Compared to Q3-21, MPHC revenue declined by 12 percent, while net profit fell 20 percent. Key contributor towards the decline in revenue and net earnings was mainly due to lowered sales volumes which declined by 20 percent, amid large scale planned maintenance shutdown at the chlor-alkali facilities carried out during Q4-21, which affected the Group’s production and sales volumes. However, selling prices were up 10 percent during Q4-21 compared to Q3-21 mainly on account of higher energy prices and firm demand. Liquidity remained robust with cash and bank balances at QR3.9bn as at December 31, 2021. Total assets as at December 31, 2021 amounted to QR17.4bn and total equity amounted to QR17.1bn.
Petrochemicals segment reported a net profit of QR1.4bn for 2021, up by 201 percent versus 2020. This notable increase in profitability was primarily driven by improved product prices owing to improved macro environment and supply shortages. Sales volumes also increased by 11 percent, compared to previous year, against a backdrop of higher plant operating days during current year versus 2020. The increase in product prices coupled with improved sales volumes led to an overall growth in revenues by 60 percent within the segment, to reach QR2.9bn for the current year. Production volumes increased by 14 percent versus 2020, as the segment had a planned periodic turnaround of Q-Chem II facilities during Q1-20, which affected the overall operating rates for last year.
Q4-21 segmental profitability marginally declined by 0.1 percent. However, segmental revenue improved by 2 percent mainly on account of higher selling prices which increased by 2 percent, amid inflated energy prices supporting downstream commodities coupled with healthy product demand. However, sales volumes remained flat on last quarter.
Chlor-alkali segment reported a net profit of QR476m for 2021, increased significantly by 281 percent compared to last year. This notable growth was primarily driven by a significant improvement in blended average selling prices, which increased by 71 percent versus 2020, complemented by renewed demand of end products (PVC, alumina/ aluminium, polymers) on the back of constructive macroeconomic drivers and supply shortages. Sales volumes marginally declined by 1 percent compared to previous year. On overall basis revenue grew by 70 percent within the segment, and marginally surpassed QR1.0bn for the current year. Production volumes marginally rose by 2 percent versus 2020, despite a planned periodic shutdown carried out during Q4-21.
On a quarter-on-quarter basis, profitability declined by 65 percent mainly on account of lowered sales volumes which decreased by 50 percent. Selling prices for Q4-21 remained higher and an increase of 8 percent was noted versus Q3-21, amid continued positive macro drivers coupled with higher energy prices.
After reviewing current year’s financial performance, with present and potential liquidity position, and considering the current and future macroeconomic conditions, business outlook, CAPEX, investing and financing needs of the Group, the Board of Directors proposed a total annual dividend distribution of QR1.38bn for the year ended December 31, 2021, representing a payout ratio of 74 percent of current year’s net earnings. A dividend of QR0.11 per share representing a dividend yield of 5.3 percent on the closing share price as of December 31, 2021. MPHC will host an IR earnings call with investors tomorrow at 1:30pm Doha Time.
