(MENAFN- Gulf Times) Lower sales, extensive planned preventive maintenance and warranty shut-downs, weak urea prices and heightened operating costs in petrochemical and steel sectors culminated in Industries Qatar (IQ) reporting a 21% year-on-year drop in net profit to QR6.3bn in 2014.
However, IQ - the holding entity of Qatar Petrochemicals (Qapco), Qatar Fertiliser (Qafco), Qatar Steel and Qatar Fuel Additives (Qafac) - said net profit overshot the budgeted target by 12% and declared 70% or QR7 per share (with face value of QR10) cash dividend, which will have to be approved by shareholders at the annual general assembly.
Earnings in 2014 were supported by the launch and subsequent ramp-up of Qatar Steel's EF-5 facility in the first quarter and Qafac's CDR (carbon dioxide recovery) plant in the third quarter, as well as by strong full year average key petrochemical product prices, an IQ spokesman said.
The planned and unplanned shutdowns and challenging market conditions experienced were largely expected and accounted for in the group's 2014 budget, and are normal features of the industries the group operates within; furthermore, full year results were ahead of the group's 2014 budget.
Results in the second half of the year showed a significant improvement over the first, with the return to normal operations following the extensive maintenance downtime experienced across all segments: consolidated net profit improved 23.5%, with the petrochemical and fertiliser segments expanding 48.7% and 31.9% respectively.
"Second half earnings were also on par with the second half of 2013, clearly showing the group's ability to generate robust profits and cash flow even during the difficult international market conditions experienced during the latter part of this year," the spokesman said.
The reported revenue for the year ended December 31, 2014 was QR6bn, showing a marginal increase of 2.5% over the previous year.
The petrochemical segment closed the year with revenue of QR6.8bn. Full year weighted average key petrochemical product prices, particularly LDPE (low density polyethylene) and LLDPE (linear LDPE) were up year-on-year, largely compensating the impact of the extensive, planned and unplanned shut-downs across all plants within the segment, particularly during the first six months of 2014.
The fertiliser segment saw its revenue drop 11% to QR5.5bn in 2014 owing to significant sales volume reductions from planned and warranty shut-downs across several fertiliser trains, and moderately weak weighted average urea prices.
Revenue in the steel segment rose by a moderate 3% to QR6bn. The benefit to the group's steel business of the launch and ramp-up of the new EF-5 facility in the first quarter of 2014 was partially offset by moderate re-bar price decline, reduced operating days due to planned and unplanned disruption, and strong prior year comparatives.
The consolidated EBITDA (earnings before interest taxes depreciation and amortisation) fell more than 19% to QR6.6bn in 2014. "The group (IQ) looks forward to 2015 with a firm belief in its competitive advantages and the knowledge that Industries Qatar is in a financially-sound position and is well-equipped for the future," the spokesman said.
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