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Industries Qatar reports a net profit of QR 7.0 billion for the nine-months period ended 30 September 2022, representing an increase of 28% compared to 9M-21

  • Earnings per share (EPS) of QR 1.16 for 9M-22 compared to QR 0.91 for the same period of last year
  • Year-on-yearprice trends continue to remain upwards, however, product prices declined versus previous quarter due to recent macro-volatilities
  • IQ gives a go-ahead to QAFCO for a new world's largest blue ammonia train and awarded an EPC contract valued at approximately USD 1.06 billion
  • IQ to fund the new PVC project announced by QVC and later become direct shareholder in QVC with a larger stake
  • Liquidity continues remain robust with a total cash and bank balance of QR 17.1 billion
  • Council of Ministers approved increasing the ownership percentage of non-Qatari shareholders in IQ up to 100%

Doha, Qatar; 26 October 2022: Industries Qatar ("IQ" or "the Group"; QE Ticker: IQCD), today reported a net profit of QR 7.0 billion for the nine-months period ended 30 September 2022, representing an increase of 28% compared to the same period of last year.

Updates on macroeconomic environment

Macroeconomic environment remained volatile throughout the year, as result of geopolitical uncertainty and recessionary fears on account of inflationary pressures and hawkish stance on interest rates by most of the Central banks. Also, exceptionally high energy prices in Europe are persistently weighing on most of the European producers. Additionally, China's strict zero-Covid policy and related lockdowns, coupled with slowdown in Chinese construction sector is bringing further uncertainties to the markets.

On overall basis, market prices across the Group's basket of products have declined versus 2Q-22 due to cautious consumer demand on account of macro-headwinds, coupled with comparatively lower crude prices. However, product prices remained strong versus last year on account of post-pandemic recovery phase.

IQ results for the nine-months period ended 30 September 2022

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CLASSIFICATION: C0 - NON-CONFIDENTIAL

Operational performance updates

Variance

Variance

Key performance indicators

9M-22

9M-21

(%)

3Q-22

2Q-22

(%)

[9M-22 vs

[3Q-22 vs

9M-21]

2Q-22]

Production (MT' million)

12.4

11.7

+6%

4.3

4.2

+2%

Plant utilization rates (%)

99%

97%

--

102%

100%

--

Average reliability factor (%)

97%

97%

--

99%

96%

--

Group's operations continue to remain robust as production volumes for the nine-months period improved by 6% to reach 12.4 million MT's. Restart of the previously mothballed DR-2 facility within Steel segment with a larger capacity, together with higher plant operating rates noted within the fuel additives segment contributed positively towards an overall growth in production volumes. Plant utilization rates for the nine- months period reached 99%, while average reliability factor remained at 97%.

Production slightly increased by 2% compared to the previous quarter, as incremental production in fertilizer and petrochemical segments were almost offset by lower steel production volumes.

Financial performance updates - 9M-22vs 9M-21

9M-22

9M-21

Variance

Key financial performance indicators

(%)

Average selling price ($/MT)

735

546

+35%

Sales volumes (MT' 000)

7,711

7,291

+6%

Revenue (QR' billion)

20.1

14.1

+42%

EBITDA (QR' billion)

8.7

7.0

+23%

Net profit (QR' billion)

7.0

5.5

+28%

Earnings per share (QR)

1.16

0.91

+28%

EBITDA margin (%)

43%

50%

--

Note: Revenue and EBITDA measures have been reported based on non-IFRS based proportionate consolidation

Group reported a net profit of QR 7.0 billion for the nine-months period ended 30 September 2022, demonstrating a notable growth of 28% versus the same period of last year. Revenue for the current period significantly grew by 42% to reach QR 20.1 billion as compared to QR 14.1 billion reported for the same period of 2021. Earnings per share (EPS) for 9M-22 was QR 1.16 versus QR 0.91 for the same period of last year.

Group's financial performance for the nine-months period 30 September 2022 was largely attributed to factors including:

  • Product prices:
    Blended product prices significantly surged by 35% versus 9M-21 and reached USD 735/MT. Growth in product prices translated into an increase of QR 5.2 billion in Group's net earnings. The increase in product prices was mainly linked to elevated market prices across all the segments, on account of constructive macroeconomic drivers carried forward from the latter part of the last year.
  • Sales volumes:
    Sales volumes for the period increased by 6% versus the same period of last year, primarily driven by higher plant operating rates and contributed QR 1.0 billion in Group's net earnings growth for the current period versus 9M-21.

IQ results for the nine-months period ended 30 September 2022

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  • Operating cost
    Group operating cost increased by 53% versus same period last year. The increase in the operating cost was primarily linked to higher variable cost on account of increased sales volumes and end- product price indexed raw material cost.

Financial performance updates - 3Q-22vs 2Q-22

3Q-22

2Q-22

Variance

Key financial performance indicators

(%)

Average selling price ($/MT)

635

818

-22%

Sales volumes (MT' 000)

2,595

2,463

+5%

Revenue (QR' billion)

5.9

7.1

-18%

EBITDA (QR' billion)

2.2

3.3

-34%

Net profit (QR' billion)

1.6

2.7

-41%

Earnings per share (QR)

0.27

0.45

-41%

EBITDA margin (%)

37%

46%

--

Note: Revenue and EBITDA measures have been reported based on non-IFRS based proportionate consolidation

During 3Q-22, the Group revenue and net profit decreased notably due to declining selling prices. Decline in selling prices was mainly linked to softening demand and lower crude oil prices, amid macroeconomic uncertainties. Sales volumes on the other hand increased by 5%, mainly on the back of growth noted in production volumes.

Financial performance updates - 3Q-22vs 3Q-21

3Q-22

3Q-21

Variance

Key financial performance indicators

(%)

Average selling price ($/MT)

635

595

+7%

Sales volumes (MT' 000)

2,595

2,352

+10%

Revenue (QR' billion)

5.9

5.0

+18%

EBITDA (QR' billion)

2.2

2.6

-17%

Net profit (QR' billion)

1.6

2.1

-21%

Earnings per share (QR)

0.27

0.34

-21%

EBITDA margin (%)

37%

52%

--

Note: Revenue and EBITDA measures have been reported based on non-IFRS based proportionate consolidation

Compared to 3Q-21, the Group revenue for 3Q-22 increased by 18% notably due to better sales volumes (+10%) and higher selling prices (+7%). Growth in sales volumes was mainly linked to better plant operating rates achieved during the current quarter versus 3Q-21, while higher average selling price were realized during the current quarter in comparison to 3Q-21 mainly due to continued momentum from the previous year. Despite growth in revenue, bottom-line profitability declined by 21% mainly on account of higher operating cost.

IQ results for the nine-months period ended 30 September 2022

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Financial position

Key performance indicators

As at

As at

Variance

30-Sep-22

31-Dec-21

(%)

Cash and bank balances (QR' billion)

17.1

16.0

+7%

Total Assets (QR' billion)

43.1

42.3

+2%

Total Equity (QR' billion)

40.5

39.5

+3%

Note: Cash and bank balances has been reported based on non-IFRS based proportionate consolidation

Group's financial position continue to remain robust, with cash and bank balances at QR 17.1 billion as of 30 September 2022, after accounting for a dividend payout relating to the financial year 2021 amounting to QR 6.0 billion. Currently, the Group has no long-term debt obligations.

Group's reported total assets and total equity reached QR 43.1 billion and QR 40.5 billion, respectively, as of 30 September 2022. The Group generated positive operating cash flows1 of QR 7.5 billion, with free cash flows1 of QR 6.9 billion during the first nine months of 2022.

Segmental performance highlights

Petrochemicals:

Variance

Variance

Key performance indicators

9M-22

9M-21

(%)

3Q-22

2Q-22

(%)

[9M-22 vs

[3Q-22 vs

9M-21]

2Q-22]

Production (MT' 000)

2,245

2,127

+6%

781

752

+4%

Average selling price ($/MT)

1,001

915

+9%

852

1,120

-24%

Sales volumes (MT' 000)

1,554

1,451

+7%

545

510

+7%

Revenue (QR' million)

5,491

4,686

+17%

1,639

2,017

-19%

Net profit (QR' million)

2,072

2,173

-5%

568

831

-32%

Note: The above figures have been reported based on non-IFRS based proportionate consolidation

Petrochemicals segment reported a net profit of QR 2.1 billion for the nine-months ended 30 September 2022, marginally down by 5% versus the same period of last year. This marginal decrease was mainly due to a slight decline in gross margins, as growth in segmental revenue being almost offset against higher operating costs.

Blended product prices for the segment improved by 9% versus the same period of last year, as result of firm demand , higher energy prices coupled with supply bottlenecks. Sales volumes also improved by 7% compared to 9M-21, in line with growth in production volumes. Growth in selling prices combined with higher sales volumes, led segmental revenue to reach QR 5.5 billion for the current nine-months period, with an improvement of 17% versus the same period of last year. On a year-on-year basis, production volumes increased by 6%, as the segment's fuel additive operations were on a commercial shutdown during early parts of last year which affected last year's production volumes.

Revenue for the current quarter declined by 19% versus 2Q-22. This decline was primarily driven by a general decline in the petrochemical prices at the macro-level. Petrochemical prices on average decreased by 24%, largely attributable to challenging macroeconomic environment and weaker crude prices noted during the quarter. Reduction in prices lead to segmental profits to decline by 32%, to reach QR 568 million for 3Q-22.

1 Reported based on non-IFRS based proportionate consolidation

IQ results for the nine-months period ended 30 September 2022

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Fertilizers:

Variance

Variance

Key performance indicators

9M-22

9M-21

(%)

3Q-22

2Q-22

(%)

[9M-22 vs

[3Q-22 vs

9M-21]

2Q-22]

Production (MT' 000)

7,187

7,202

-0%

2,495

2,392

+4%

Average selling price ($/MT)

669

401

+67%

572

742

-23%

Sales volumes (MT' 000)

4,702

4,613

+2%

1,563

1,516

+3%

Revenue (QR' million)

11,110

6,534

+70%

3,157

3,972

-21%

Net profit (QR' million)

4,164

2,818

+48%

857

1,562

-45%

Fertilizer segment reported a net profit of QR 4.2 billion for the nine-months period ended 30 September 2022, with an increase of 48% versus the same period of 2021. This increase was primarily driven by growth in revenue. Segment's revenue grew by 70% for 9M-22 versus last year, primarily due to improved selling prices. Selling prices improved significantly by 67% versus the same period of last year, where restricted supply from key exporting regions, together with inflationary pressures amid higher crop and energy prices remained key factors for an elevated year-on-year price trajectories for the fertilizers. Sales volumes also marginally increased during the current period versus 9M-21 mainly due to timing of shipments, while production volumes remained broadly flat versus last year on the back of relatively similar number of operating days.

On a quarter-on-quarter basis, segmental revenue declined notably by 21% versus the previous quarter owing to a significant reduction in the selling prices. A decline of 23% was noted in the selling prices during the current quarter, as markets remained cautious in a significantly elevated energy price environment. On the other hand, sales volumes improved marginally due to improved operating days and

  1. growth of 3% was noted on a quarter-on-quarter basis. Segmental net profit for 3Q-22 declined by 45% mainly due to comparatively lower selling prices realized during 3Q-22 versus the previous quarter.

Steel:

Variance

Variance

Key performance indicators

9M-22

9M-21

(%)

3Q-22

2Q-22

(%)

[9M-22 vs

[3Q-22 vs

9M-21]

2Q-22]

Production (MT' 000)

2,970

2,335

+27%

991

1,047

-5%

Average selling price ($/MT)

664

652

+2%

595

729

-18%

Sales volumes (MT' 000)

1,455

1,227

+19%

487

437

+12%

Revenue (QR' million)

3,514

2,913

+21%

1,055

1,159

-9%

Net profit (QR' million)

774

629

+23%

153

360

-57%

Steel segment reported a net profit of QR 774 million, up by 23% versus the same period of last year. Improved segmental earnings were mainly driven by higher revenues, which increased by 21% versus same period of 2021. Additionally, segment's associate that produces and sell iron oxide pellets, Foulath Holdings, reported commendable financial results against a backdrop of improved operations. Qatar Steel's share of net earnings in Foulath increased by 240% versus 9M-21 and reached QR 269 million for the nine-months period ended 30 September 2022.

Growth in revenue was primarily driven by improved sales volumes by 19% due to higher production volumes. Production ramped up during this year, as the segment restarted DR-2 facility; a relatively larger facility that was previously mothballed and decided to mothball a smaller DR-1 facility. Selling prices on average only increased marginally by 2%, mainly due to softening domestic demand, coupled with slowdown in international steel prices.

IQ results for the nine-months period ended 30 September 2022

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IQ - Industries Qatar QSC published this content on 26 October 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 October 2022 15:07:07 UTC.