Industries Qatar (IQ) has reported a net profit of QR2.1 billion for the six-month period ending June 30, 2023, marking a 62 percent drop compared to the same period last year.
The macroeconomic environment continued to pose challenges during the first half of 2023, with persistent geopolitical uncertainties and fears of recession driven by hawkish monetary policies. These factors contributed to subdued demand for commodities across markets.
The petrochemical segment faced difficulties due to a slower global economic recovery, oil price volatility, and macroeconomic uncertainty. An oversupplied market was compounded by cautious buyers amid recessionary concerns.
The fertilizer sector experienced a downward trajectory in prices, primarily due to buyer caution and eased supply disruptions. This decline was amplified by falling grain, energy, and commodity prices, as well as credit constraints affecting small-scale farmers in developing nations.
Domestic steel demand showed signs of recovery after a sluggish period in 2022, although global steel prices remained unstable. China’s post-Covid recovery was slow, impacting the construction sector.
Despite challenges, the Group improved its production volumes by 3 percent to reach 8,362 million MT in 1H-23, driven by higher operating rates and improved plant availability. Plant utilization rates reached an impressive 100 percent, reflecting the Group’s commitment to operational excellence and HSE standards.
However, production volumes dipped 10 percent in 2Q-23 due to maintenance shutdowns in the fertilizer segment, vital for operational reliability and product quality.
The financial report for 1H-23 showed a decline in revenue and earnings per share (EPS). EPS for 1H-23 dropped to QR0.35 from QR0.90 in 1H-22, while Group revenue decreased by 38 percent to QR8.9 billion compared to QR14.3 billion in 1H-22.
Several factors contributed to the decline in financial performance.
Blended average product prices fell by 40 percent compared to 1H-22, impacting net earnings by QR5.9 billion. Fertilizer prices were a significant contributor to this decline, plummeting by over 50 percent from the previous year.
Although sales volumes increased slightly by 3 percent due to higher production, this only partially offset the impact of falling prices.
Operating costs decreased by 20 percent in 1H-23, primarily due to lower variable costs. However, increased volumes and general inflation partially offset this reduction.
Industries Qatar’s financial position remains strong, with cash and bank balances totaling QR14.9 billion as of June 30, 2023. Notably, the Group holds no long-term debt obligations.
Net profit for IQ’s petrochemical segment declined by 45 percent in 1H-23, driven by lower blended product prices and relatively flat sales volumes.
In fertilizer segment, net profit plummeted by 78 percent in 1H-23 due to reduced segmental revenue and lower selling prices, influenced by global macroeconomic challenges.
In steel segment, net profit dropped by 55 percent in 1H-23, attributed to lower revenues resulting from reduced selling prices and higher volume-related operating expenses.
Industries Qatar’s decision to raise the foreign ownership limit to 100 percent signifies a strategic move to attract foreign investment and enhance its global presence. This change followed shareholders’ approval and government endorsement in October 2022.
The Group is set to engage investors in an earnings call on August 14, 2023, discussing its financial results, business outlook, and other relevant matters. Investors and stakeholders can access the Investor Relations presentation on the Group’s website.
Despite prevailing economic challenges, Industries Qatar remains dedicated to operational excellence and maintaining a robust financial position.