An aerial view of the Q-Chem and Q-Chem II facilities.
Doha: The Mesaieed Petrochemical Holding Company (MPHC), one of the region’s premier diversified petrochemical conglomerates, yesterday reported a net profit of QR330m for the nine-months period ended September 30, 2020, a decline of 33 percent compared to the same period last year. Challenging macroeconomic conditions including decline in selling prices and sales volumes continued to weigh on the financial and operational performance of the Group.
When compared to the previous quarter, the Group’s revenue and net profit significantly increased by 36 percent and 150 percent, respectively, to QR195m. The recovery was attributed to the sequential increase in prices across key products on the back of crude price recovery, supply shortages, and an overall deferral of new capacity additions amid uncertainties over the COVID-19 pandemic.
Liquidity remained robust as cash and cash equivalents of MHPC for the first nine months of operations reached QR1.6bn. The Group’s total assets reached QR15.9bn during the period, compared to QR16.4bn as at December 31, 2019.
The Group’s total revenues for the nine-months period reached QR1.6bn (assuming proportionate consolidation), down by 29 percent, compared to the same period last year. Earnings per share (EPS) is at QR0.026, compared to QR0.039 for the same period in 2019.
MPHC’s sales volumes declined by 11 percent, compared to the first nine months of 2019, driven by a combination of reasons including lockdowns of key market geographies, weaker demand and lower production due to periodic planned maintenance shutdowns.
Chairman of the Board of Directors at MPHC, Ahmad Saif Al Sulaiti, said: “Despite distressed market conditions, we remained resilient and continued to implement our business strategy to contain cost and specifically implemented OPEX and CAPEX optimisation measures in order to negate the challenges arising out of the pandemic and weaker economic environment. During this year, we successfully implemented our planned turnarounds within the defined timelines and budget.
“In response to contain the pandemic situation, we continued to ensure safety of our employees and spur business continuity. Our marketing partner worked diligently while closely monitoring the evolving situation and acted prudently to minimise the disruptions to our supply chain. Looking ahead, we are well positioned to solidify our market position with a focus on generating improved shareholder returns, through leveraging our competitive advantages together with our flexibility in operations and diversified portfolios, with a leaner cost base,” he added.
On the demand side, recent recoveries were evident amid continuous unprecedented stimulus and lifting of lockdown in major markets. Operating costs also have generally declined in line with the optimisation initiatives implemented across the Group. Production volumes also improved during the quarter, as there were no major shutdowns during the period.
The gradual recovery of the global economy that began during the later part of the second quarter is factored in the Group’s financial and operational performance with notable price recoveries in the third quarter. However, the risk of COVID-19 pandemic has not been fully eradicated, which may hamper these early signs of recoveries.
During the nine-months period ended September 30, 2020, the Petrochemicals segment reported a total revenue of QR1.2bn, a decrease of 30 percent from the same period last year. Net profit reached QR237m, a decline of 66 percent from the same period last year. Revenue and earnings were impacted by a drop in sales volumes by 13 percent and selling prices by 20 percent. The reduction in sales volumes was primarily due to the planned periodic turnaround of Q-Chem II facilities during the first quarter of the year, while decline in selling prices was attributed to softening demand for petrochemical products arising from the current macroeconomic backdrop. Production volumes dropped by 13 percent compared to the same period last year, amid periodic planned turnarounds, which are necessary to maintain the plant life and ensure HSE standards.
The Chlor-alkali segment posted a revenue of QR377m during the period, a decline of 25 percent compared to the same period last year. The decline was due to lowered sales volumes which declined by 8 percent and selling prices by 19 percent, compared to the first nine months of 2019. Sales volumes fell due to the planned shutdown of the facilities in during the first quarter of 2020 and non-availability of access to the core markets for Chlor-Alkali products, due to COVID-19 lockdowns in the first part of the second quarter. For such period, the segment continued with the production, and built inventories by holding bulk liquids via floating storage.
During the same period, the segment reported a net profit of QR42m, a decline of 70 percent from the same period last year, mainly due to the overall drop in revenue, while production volumes dropped by 10 percent due to the periodic planned shutdowns.
The Group also announced the appointment of Khalid Sultan Al Kuwari as the Chief Executive Officer (CEO) of Qatar Chemical Company Limited (Q-Chem) and Qatar Chemical Company II Limited (Q-Chem II) with effect from November 1, 2020.
MPHC will host an IR earnings call with investors to discuss its latest financial results, business outlook and other matters on November 3 at 1:30pm Doha Time.
