Industries Qatar (IQ) has announced its financial results for the six months ending June 30, reporting a net profit of QR 2.8 billion.
In comments issued Sunday, HE Minister of Energy and Industry and IQ Chairman and Managing Director, Dr. Mohammed bin Saleh Al Sada, said the company concluded the second quarter of 2014 with a net profit of QR 1.2 billion, a decrease of QR 0.3 billion over the first quarter of 2014, as the group continued its series of major shutdown program including warranty shutdowns that were planned for the first half of 2014.
"These preventive maintenance and warranty shut-downs are an essential requirement for large, industrial facilities as they can help minimize unplanned disruption, ensure product quality is maintained and, ultimately, contribute to an extension of the plants’ production life, improved reliability, and optimize environmental impact. I can now confirm that the significant portion of the planned shutdowns has been completed and the group's facilities are much more sustainable than ever before and paving the way for a new era of growth and operational excellence," HE Dr. Al Sada said.
"We also welcome the elevation of Qatar Exchange to 'Emerging Market' status from the 'Frontier Market' status and inclusion of Industries Qatar to the MSCI (Morgan Stanley Capital International) Index. The inclusion of Industries Qatar to the MSCI Index clearly signifies MSCI's recognition of IQ's contribution to the state's capital market development," he added.
Commenting on the progress of the recently launched EF-5 steel melt shop, IQ Chief Coordinator Mr. Abdulrahman Ahmad Al Shaibi said, "The ramp up in production of the recently launched steel melt shop has been excellent and so far produced more than 336,000 MT's of billets during the first half of 2014 exceeding the budget by 32 percent and currently operating at 84 percent of its designed capacity.
The EF5 production has helped in increasing sales of billets with consistent supplies to our fully owned subsidiary, Qatar Steel - Dubai, for production of rebar and wire-rod coils. We expect the facility to reach close to its designed capacity in 2015." Al Shaibi added that "the original intention was for the new steel melt shop's electric furnace to immediately replace two of Qatar Steel's old electric furnaces; however, Qatar Steel has subsequently decided to continue operating EF-1 and EF-2 for an additional year, before decommissioning those old facilities in Q2-2015."
Briefing on the group's first half year financial performance, Al Shaibi further said, "The muted year-on-year financial results can be primarily attributed to reduced sales volumes following extensive planned preventive maintenance and warranty shut-downs in the majority of the group's key facilities, and tightened operating margins primarily due to weaker fertilizer prices, increased operating expenses and annual cost inflation, which were only partially dampened by the commercial launch of Qatar Steel's QR 1.2 billion EF-5 facility."
Revenue Reported revenue for the six months period ended June 30, 2014 was QR 3.1 billion, an increase of QR 0.05 billion, or 1.6 percent, on the same period of 2013; however, on a like-for-like basis, management reporting revenue - assuming proportionate consolidation - was QR 8.6 billion, a decrease of QR 1.3 billion, or 13.4 percent. Reported revenue for the second quarter was QR 1.8 billion, an increase of QR 0.5 billion or 37.5 percent compared to first quarter, which was primarily driven by the operation of EF-5. Petrochemical Segment Petrochemical revenue for the first six months of 2014 was QR 2.9 billion (2013, H1: QR 3.3 billion), a year-on-year decrease of QR 0.4 billion, or 11.4 percent.
This reduction is primarily driven by extensive, planned shut-downs across all plants within the segment: QAPCO's ethylene plants lost an average of 36 days per plant, LDPE units an average of 41 days per plant, and the LLDPE facility lost 32 days following the general shut-down during the first half of 2014.
In addition, the group's fuel additives joint venture, QAFAC, recorded a total of 64 days of downtime in its methanol facility and 46 days of downtime in the MTBE unit following routine, planned maintenance during the reporting period.
These shutdowns resulted in the segment recording an adverse volume variance of QR 0.6 billion and a 204,000 MT reduction in sales volume. Quarterly utilization rates were similarly affected, with the segment averaging 75 percent in comparison to its historical average of between 95 percent and 110 percent.