Mesaieed Petrochemical Holding Company (MPHC), one of the region’s premier diversified petrochemical conglomerates, yesterday announced a net profit of QR379m for the first quarter of this financial year ended March 31 (Q1 2021), showing a significant increase of 564 percent compared to the same period last year (Q1-2020).
Total revenues reached QR893m (assuming proportionate consolidation), an increase of 73 percent compared to QR516m for the same period last year. The group recorded an earnings per share (EPS) of QR0.030 for the first quarter this year compared to QR0.005 for the same period in 2020.
The Group’s financial performance was impacted by the continuous uptick in macroeconomic sentiments which acted as primary catalyst for a renewed demand for commodity markets.
During the first quarter, macroeconomic conditions continued the upward trend that started from Q4-2020 backed by vaccine rollout, easing of lockdowns in major economies, together with continued stimulus by major sovereigns.
On the other side, supply shortages remained evident throughout the period, especially unplanned plant outages on account of unprecedented winter storm in certain parts of the US which persisted for almost two months, and created an overall supply shortage for petrochemicals and chlor-alkali products.
Compared to the previous quarter (Q4-2020), MPHC’s revenue improved by 7 percent, while net profit significantly improved by 88 percent. The key contributor towards the growth was the overall increase in average selling prices, which continued their positive trajectory on the back of continued macroeconomic recovery and supply shortages.
Average selling prices increased by 18 percent in the first quarter of this year over the fourth quarter of last year. Sales volumes on the other hand declined by 10 percent over Q4-2020, due to higher maintenance shutdown days.
MPHC’s liquidity remained robust as the Group’s cash and cash equivalents stood at QR2.4bn during the first quarter of 2021, a marginal increase of 1 percent. The Group’s total assets stood at QR16.0bn as at March 31, marginally down by 1 percent compared to December 31, 2020. Operations continue to remain resilient with total production for the period reaching 280 thousand MTs, up by 47 percent over Q1-2020.
The overall increase in production volumes was mainly attributed to improved plant operating rates in the first quarter, as major planned turnarounds and preventive maintenance shutdowns were carried out in certain MPHC’s joint venture facilities during the same period last year.
Compared to the previous quarter (Q4-2020), the production volumes declined by 9 percent, as there were lesser operating days available during the first quarter of 2021 amid maintenance shutdown within chlor-alkali segment.
During the period, product prices on average increased by 36 percent compared to Q1-2020, translating into an increase of QR239m in MPHC’s bottom line earnings. The renewed product demand supplemented by supply constraints resulted in a significant growth in commodity prices. Sales volumes increased by 28 percent over the same period last year, driven by improved operating rates.
The overall growth in sales volumes translated into an increase of QR142m in MPHC’s bottom line earnings. The positive trajectory in product prices and improved volumes was slightly offset by increase in variable costs, which contributed QR80m negatively towards the Q1-2021 net earnings in comparison to Q1-2020.
Current period net earnings were also positively impacted by favourable variance amounting to QR48m, in relation to inventory differentials, due to lesser drawdowns in comparison to the first quarter of last year.
During the first quarter, the Petrochemicals segment bounced back with a net profit of QR250m, an increase of over 800 percent compared to the same period last year. This notable increase was primarily driven by improved products prices, which increased by 31 percent over Q1-2020 amid improved macroeconomic dynamics.
Sales volumes also increased by 29 percent, compared to the same period last year, against a backdrop of higher operating days in the current period. The growth in product prices coupled with sales volumes led to an overall rise in revenue by 68 percent within the segment, to reach QR617m for the current period.
Production volumes increased by 49 percent compared to the same period last year, as the segment had planned periodic turnaround of Q-Chem II facilities during Q1-2020, which affected the overall operating rates for the said quarter in comparison to Q1-2021.
Net profit for the first quarter increased by 15 percent compared to the previous quarter (Q4-2020). This was primarily driven by continued positive trajectory of product prices, on the back of sequential macroeconomic recovery carried forward from the latter part of 2020 and supply constraints.
The Chlor-alkali’s segment recorded a significant recovery with net profit of QR125m for the first quarter compared to QR22m during the same period last year. This notable growth was primarily driven by significant improvement in blended average selling prices, which increased by 47 percent over Q1-2020, complemented by renewed product demand and supply side shortages.
Sales volumes also increased by 26 percent compared to the same period last year, against the backdrop of better utilisation rates in the current period. The growth in product prices coupled with sales volumes led to an overall increase in revenue by 86 percent within the segment, to reach QR277m for the current period.
Production volumes rose by 44 percent as the segment had more planned periodic shutdowns during Q1-2020. Net profit for the first quarter increased by 50 percent compared to Q4-2020, mainly on the back of continued positive trajectory of selling prices.
MPHC will host an IR earnings call with investors to discuss its first quarter results, business outlook and other matters on May 4, 2021 at 12:30pm Doha Time. The IR presentation that accompanies the conference call will be posted on the ‘financial information’ page within the Investor Relations section of MPHC’s website.
