DOHA: Industries Qatar (IQ) has posted a net profit of QR3bn in 2016, the region’s industrial giant announced last night.
The net profit is down 34% on the previous year, mainly “impacted by weaker prices, and one-off items.”
Incorporated as a Qatari joint stock company in April 2003, IQ directly holds shares in the following subsidiaries or joint ventures Qatar Steel, Qapco, Qafco and Qafac.
“Reported results for the year are considered highly commendable considering the challenging macro-economic and competitive environment in which the group was operating under during 2016. The year started on a cautionary note with oil prices falling below $30 per barrel and presented many challenges to the group during the year,” IQ said.
“The low oil price environment had a direct and a significant impact on the group’s petrochemical segment as prices remained very low in the early part of 2016. The lower oil prices presented greater opportunities for the non-natural-gas-based petrochemicals producers (for example naphtha-based producers) to be more competitive and posed serious challenges for the gas-based petrochemical producers,” IQ said.
While the low oil price environment presented a lot of challenges for the petrochemical segment, the fertiliser segment was faced with other significant issues. The prices of the group’s fertiliser products came under severe pressure in 2016 due to the current and expected level of elevated supply, weaker global demand, currency issues, and reached a record low early in the second half of the year. These prices have somewhat recovered in the latter part of the year due to a gradual rise in costs for some producers, and a slight improvement in the overall demand, IQ said.
The steel segment, on the other hand, had a set of different challenges. Spending cuts, delays, and cancellation of major government and infrastructure projects in the region have resulted in lower steel demand. In addition, steel supply in 2016 expanded due to lower production costs arising from the decline in material costs, which exerted further pressure on the product prices. However, the segment was able to improve its operating costs significantly, thereby neutralising the adverse impacts which arose from lower demand, IQ said.
Nevertheless, the group’s financial and operating results significantly exceeded the budgeted expectations with stable production, sales volumes and improved operating costs.
The net profit translates into earnings per share of QR4.9, down 34% on 2015.
