Industries Qatar (IQ) on Monday reported a net profit of QR8.1 billion for 2021, representing an increase of 321 percent compared to last year.
Group revenue significantly improved 77 percent to reach a record of QR20.2 billion as compared to QR11.4 billion for 2020. Earnings per share (EPS) amounted to QR1.34 for the year, against QR0.32 for last year. Driven by impressive operating cash flows, EBITDA increased by 152 percent and reached QR10.2 billion.
The board of directors proposed a total annual dividend distribution of QR6.05 billion for 2021, representing a payout ratio of 75 percent of current year’s net earnings. This amounts to a dividend of QR1 per share, representing a dividend yield of 6.5 percent on the closing share price as of December 31, 2021.
Commenting on the Group’s financial and operational performance for the year, Industries Qatar Chairman HE Saad Sherida Al Kaabi said, “The year 2021 was an exceptional year where the Group has strongly risen from last year’s challenges. During this year, we captured the benefits of a solid commodity price environment, underpinned by renewed product demand. Some headwinds amid supply chain bottlenecks persisted throughout the year, but QatarEnergy’s marketing and logistics efforts resulted in strong support to our entities while ensuring volumes remained unaffected without any operational disruption.”
Going forward, he said, “We will continue to thrive for operational excellence by focusing on our human capital and environment responsible growth. Our commitment to growth will sure not come at the expense of cost and sustainability. We will continuously be at the level of our shareholders’ confidence and create long term value.”
During the year, elevated consumer spending, continued government stimuli, normalisation of investments resulted in an accelerated global GDP recovery led to a notable increase in demand for downstream commodities. On the other hand, industry supply remained constrained due to weather calamities in the US, higher energy prices in Europe, dual policy measures in China, coupled with supply chain bottlenecks that remained evident at a global scale throughout the year.
These factors created a wider supply-demand imbalance across most of the commodities and played a pivotal part in persistent inflationary price trends.
Group’s operations remained strong with production volumes for the full year reaching 15.3 million MT’s, marginally down by 3 percent versus last year. This marginal reduction was driven by several factors including the Group’s strategic decision to mothball part of its steel facilities in April’20, major maintenance turnaround carried out at polyethylene facilities, commercial shutdown at MTBE facilities, coupled with planned and unplanned maintenance mainly at fertiliser facilities. Plant utilisation rates for the year 2021 reached 96 percent, while the average reliability factor stood at 97 percent.
During the fourth quarter of 2021, polyethylene facilities successfully concluded a major turnaround without any significant HSE incidents and encompassed most of the plants within the polyethylene business. The reduction in production volumes during the fourth quarter of 2021 in comparison to the third quarter of 2021 was mainly linked to polyethylene facilities’ turnaround and planned and unplanned shutdown carried out within fertiliser facilities.
Group’s financial performance for the year in comparison to last year was largely attributed to many factors.
Blended product prices surged significantly 58 percent against last year and reached $597/MT. The growth in product prices translated into an increase of QR8.5 billion in the Group’s net earnings. This price increase was linked to elevated market prices across all the segments, with the fertiliser segment reporting a contribution of QR 5.3 billion, while the petrochemicals segment contributed QR 2.3 billion towards the overall growth in profitability versus 2020. The steel segment contributed QR 0.9 billion to earnings’ growth versus last year.
Sales volumes increased by 20 percent against last year, primarily driven by additional volumes relating to Qafco trains 1-4, which operated under a temporary gas processing arrangement during the first seven months of 2020. Nevertheless, this growth in volumes was partially offset by a large turnaround carried out at the Group’s polyethylene facilities, mothballing of certain steel facilities, commercial shutdown at fuel additives facilities, and planned and unplanned shutdowns at some of the fertiliser trains.
Group operating expenses increased 25 percent against last year. This increase was attributed to higher variable costs on account of increased sales volumes and raw material cost inflation. On the other hand, the Group continue to benefit from the cost optimization initiatives implemented in the second half of 2020.
During the fourth quarter of 2021, Group revenue and net profit improved sharply versus last quarter. The benefits gained from improved selling prices were more than adequate to offset sales volumes lost due to planned maintenance and unplanned shutdowns. EBITDA for the quarter improved significantly by 23 percent to reach QR3.2 billion.
Average product prices climbed by more than 33 percent primarily driven by higher polyethylene and fertiliser prices. Fertiliser prices continue to reach new highs against a backdrop of strong demand, healthy agricultural economics, lower inventory levels and export restrictions imposed by key producing countries.
Petrochemical prices advanced moderately versus the previous quarter in line with higher crude prices and improved demand.
Group’s financial position continues to remain robust, with cash and bank balances at QR16 billion as of the end of December 31, 2021, after accounting for a dividend payout for the financial year 2020 amounting to QR2 billion.
Currently, the Group has no long-term debt obligations. Group’s reported total assets and total equity reached QR42.3 billion and QR39.5 billion, respectively, as of December 31, 2021.
Driven by strong EBITDA performance during the current financial year, the Group generated positive operating cash flows of QR9.4 billion, with free cash flows of QR8.1 billion.
The petrochemicals segment reported a net profit of QR 2.5 billion for 2021, up by 133 percent against last year. This significant increase was primarily linked to improved product prices owing to better macroeconomic dynamics and supply bottlenecks. The performance of the segment was affected to an extent due to a decline in production volumes on account of a major turnaround carried out at most of the polyethylene facilities during the fourth quarter of the year.
Segmental revenue for the year reached QR6 billion, with an improvement of 51 percent versus last year, amid an improved price environment.
The fertiliser segment reported a net profit of QR4.7 billion for 2021, with an increase of 544 percent, against last year. This increase was primarily driven by revenue growth of 133 percent to reach QR10.3 billion. Selling prices improved significantly by 100 percent versus last year and reflected positively on the segmental performance and led to improved EBITDA margins.
Rising energy prices, restricted supply from key exporting economies, together with strong demand has been a driving force behind soaring fertiliser prices.
Sales volumes increased by 38 percent during 2021 against 2020, as full volumes relating to Qafco trains 1-4 were recorded as part of 2021, as against an absence of volumes for the first seven months of 2020, amid temporary gas processing arrangement. Production within the segment slightly declined by 1 percent compared to last year.
Following the strategic restructuring initiatives implemented last year, the steel segment returned to profitability in 2021. The steel segment reported a net profit of QR716 million for 2021, after incurring a net loss of QR 1.3 billion for last year. This noticeable improvement was mainly due to multiple factors including:
Selling prices improvement: selling prices improved by 31 percent compared to last year, due to an increase in demand linked to a rebound in construction activity. Iron ore prices on the other hand remained volatile with a significant price hike noted during the early parts of the year, followed by recent lower trajectories.Board recommends dividend distribution of QR1 per share * Company registers record revenue of QR20.2 bn in 2021