Doha: Mesaieed Petrochemical Holding Company (“MPHC” or “the Group”; QE ticker: MPHC), yesterday announced a net profit of QR269m for the three-month period ended 31 March 2023, representing a decline of 39 percent compared to 1Q-22.
Macroeconomic climate remained wavered during the first quarter of 2023, marked by several factors carried forward from last year which affected the commodity markets, including geopolitical conflicts, and recessionary fears linked to inflation related pressures and higher interest rate environment. Additionally, China’s slow paced post-COVID recovery phase, along with a recent fall in natural gas prices is bringing an additional layer of uncertainty to the commodity markets.
On overall, commodity prices for MPHC’s basket of products declined on a year-on-year basis, following last two year’s significantly high price environment mainly due to cautious approach from buyers amid macro-headwinds, coupled with comparatively lower energy prices.
However, prices improved to an extent versus 4Q-22, mainly on the back of relatively better supply-demand dynamics.
MPHC’s operations continue to remain robust and resilient with total production for the current period reaching 239 thousand MTs. Production for 1Q-23 slightly declined versus 1Q-22, mainly due to a maintenance turnaround carried out at QVC facilities during 1Q-23 which affected production volumes for 1Q-23.
On a quarter-on-quarter basis production volumes for 1Q-23 declined by 17% in comparison to 4Q-22, mainly due to a decline noted in production volumes from chlor-alkali segment, linked to maintenance turnaround.
MPHC reported a net profit of QR269m for the three-month period ended 31 March 2023, down by 39% compared to the last year. This decline in profitability was mainly linked to lowered Group revenue, which declined by 26% and reached QR721m.
Decline in Group revenue was mainly linked to the decrease noted in average blended product prices, which declined by 21% compared to 1Q-22, translating into a decline of QR 224m in MPHC’s current period net earnings as compared to the same period of last year. Subdued product demand amid macroeconomic headwinds, along with excess supply resulted in lowered commodity prices.
Sales volumes also declined by 6 percent versus 1Q-22, mainly driven by lowered sales volumes reported by the chlor-alkali segment, being partially offset by higher volumes reported by the petrochemicals segment. Negative movement in sales volumes translated into a decline of QR32m in MPHC’s 1Q-23 net earnings versus the same period of last year.
EBITDA for the current period amounted to QR372m with a decline of 31 percent versus 1Q-22, mainly due to lower revenue. EBITDA margins for 1Q-23 reached 52% versus 56 percent achieved during 1Q-22.
MPHC’s bottom-line profitability declined by 9 percent versus 4Q-22, mainly due to lowered revenue where a decline of 16 percent was noted on a quarter-on-quarter basis.
Decline in revenue was mainly linked to lowered sales volumes which decreased by 20 percent versus 4Q-22, as production volumes declined mainly linked to maintenance turnaround in Chlor-alkali facilities. Lower sales volumes contributed QR169m negatively to the MPHC’s net earnings on a quarter-on-quarter basis.
Liquidity remained robust with cash and bank balances standing at QR3.5bn as at 31 March 2023. Decline in cash and bank balances was mainly due to dividend payment for the financial year 2022, being partially offset by positive cash flow generation during 1Q-23. Total assets as at 31 March 2023 amounted to QR 16.8 billion and total equity amounted to QR16.3bn.
MPHC will host an IR earnings call with investors to discuss its results, business outlook and other matters on Thursday, 11th May 2023 at 1:30 p.m. Doha Time. The IR presentation that accompanies the conference call will be posted on the ‘financial information’ page within the Investor Relations section at MPHC’s website.
