DOHA: Industries Qatar, one of the region’s industrial giants with interests in the production of a wide range of petrochemical, fertiliser and steel products, yesterday announced its financial results for the period ended December 31, 2015 with net profit of QR4.4bn.
Net profit for the period under review was down QR1.8bn, or 29.9 percent, against the same period of 2014. This reduction in net profit was entirely driven by the reduced revenues resulting from price deflation across all segments despite the group vastly benefitted from improved sales volumes and improved operating costs.
The Board of Directors has always supported, and continues to support, a rational dividend payout practice that balances the needs and aspirations of shareholders with the necessity of maintaining adequate liquidity within the group for actual and potential investment requirements, and unexpected adverse trading conditions, and the principles of financial prudence.
The Board of Directors, proposes a total annual dividend distribution of QR3bn, equivalent to a payout of QR5 per share and representing 50 percent of the nominal value.
The group reported sound financial and operating performance across all business segments during the current year on the backdrop of adverse economic and trading conditions as the group’s sales volumes grew in excess of 9 percent on last year and recorded the highest sales volume since group’s inception in 2003. Sales volumes were ably supported by the highest production in the group’s history of 17 million MT’s, following the return to normal operations of most of the group’s productions facilities which were on extensive maintenance during the first half of 2014 despite two facilities within the steel segment were stopped from the beginning of the year after the ramping up of EF-5 furnace.
Selling prices, across all segments were, however impacted significantly due to the prevailing unfavorable economic conditions driven by lower crude oil prices and weaker demand in many economies coupled with excess supply. Prices in the petrochemicals segments were heavily declined due to their close correlation with crude oil prices.
In line with the lower crude oil prices, petrochemical prices closed the year with a reduction of about 28 percent reduction on 2014. Fertiliser prices on the other hand suffered a notable decrease of circa 15 percent on last year due to excess supply in some of the key producing countries, muted demand in some of the major buying countries and low energy prices. Steel prices have also declined considerably following the construction slowdown due to current economic meltdown and excess supply driven by lower raw material costs.
Cash position continued to remain strong with cash across the group has reached QR 10.6bn after paying the 2014 dividend of QR4.2bn, increase of QR1.1bn, or 11.9 percent, reflecting group’s strong liquidity position even under stressed trading environment.
Reported revenue under IFRS 11 for the period ended December 31, 2015 was QR5.2bn, a moderate decrease of 12.4 percent, over the same period of 2014. On the other hand, on a like-for-like basis, management reporting revenue — assuming proportionate consolidation under IAS 31 — was QR16bn, a decrease of QR2.2bn, or 12 percent, versus the same period of 2014. This year-on-year reduction was primarily driven by a significant reduction product prices across all segments most notably in the prices of petrochemicals following the oil price decline that began in early Q4, 2014 which continued to remain low throughout 2015 and reached one of the lowest in December 2015. Prices of fertiliser and steel have also suffered a severe setback due to excess supply in some of the key producing countries due to lower energy and raw materials costs, and muted demand in some of the major buying countries
The Group reported the highest sales volumes since its inception, and were significantly up on last year (by around 10 percent) as the group benefited by a comparatively lower number of maintenance days in the current year since most of the group’s production facilities completed their planned and warranty maintenance programmes in 2014 resulting in a significantly higher maintenance days during 2014. Accordingly, the current year production reached the highest in group’s operating history and the production utilisation reached 104.6 percent (year-to-date 2014: 98.4 percent) resulting in additional production and sales.