Tribune News Network
Doha
Mesaieed Petrochemical Holding Company (MPHC) on Sunday announced a net profit of QR 1.1 billion for 2023, representing a decline of 39 percent compared to 2022.
Commenting on the financial and operational performance for 2023, MHPC Chairman Ahmad Saif Al Sulaiti said, "In successfully navigating the challenges posed by our business dynamics, we achieved commendable financial results despite market volatility. Our teams worked tirelessly to safeguard operations, emphasising our business strengths. On the sustainability front, we are actively reducing our environmental footprint, concurrently building our operations with a strong focus on energy efficiency and conservation pillars.”
Also this year, Sulaiti said, "QatarEnergy successfully fulfilled its IPO commitment by distributing the second and last tranche of incentive shares to eligible MPHC shareholders. This landmark achievement saw the transfer of 948 million ordinary shares from QatarEnergy ownership to eligible IPO shareholders, by the mechanisms outlined in the IPO Prospectus of MPHC. My sincere thanks to QatarEnergy’s leadership for their support and guidance in making this possible”
In 2023, macroeconomic uncertainties persist, characterized by numerous challenges that contribute to fluctuations in commodity markets. These challenges include concerns about a potential recession due to inflationary pressures and a high-interest rate environment. Additionally, the commodity markets face increased uncertainty due to a slower global economic recovery and declining energy prices, creating a dynamic and challenging environment.
The oversupplied market is further compounded by a weakened global economy, as consumers adjust their spending habits in response to inflation, recession, and rising interest rates.
Overall, the average commodity prices for MPHC’s basket of products declined on a year-on-year basis, with a marginal increase on a quarter-over-quarter basis. This quarterly trend indicates evidence of stabilisation in the macroeconomic environment, following the high-price environment of the past couple of years.
MPHC’s operations continue to remain robust and resilient with total production for the current period reaching 1,137 thousand MTs. Production for 2023 flat in comparison to last year. Production remains flat despite the maintenance turnaround carried out at QVC facilities during the first quarter of 2023. On a quarter-on-quarter basis production volumes for the fourth quarter of 2023 decreased by 4 percent in comparison to the third quarter of 2023, mainly due to a decline noted in production volumes from Petrochemicals segment.
MPHC reported a net profit of QR1.1 billion for 2023, down by 39 percent compared to last year. This decline in profitability was mainly linked to lowered Group revenue, which declined by 21 percent and reachedQR3.1 billion.
The decline in Group revenue is primarily attributed to the decrease observed in average blended product prices, which fell by 19 percent compared to the same period last year.
This decline translated into a QR832 million decrease in MPHC’s net earnings for this year compared to last year. The subdued commodity demand, driven by macroeconomic headwinds and exacerbated by surplus supply, led to a decrease in commodity prices.
Sales volumes also declined marginally by 2 percent against the same period last year, mainly driven by lowered sales volumes reported by the chlor-alkali segment, being partially offset by higher volumes reported by the petrochemicals segment on the back of higher operating days compared to last year. Negative movement in sales volumes translated into a decline of QR 24 million in MPHC’s net earnings for the period ended 31 December 2023 net earnings against last year.
EBITDA for the current period amounted to QR1,526 million with a decline of 26 percent versus the same period last year, mainly due to lower revenue. EBITDA margins for 2023 reached 52 percent against 55 percent achieved during the same period last year.
Compared to the third quarter of 2023, MPHC revenue increased by 8 percent and net profit declined by 11 percent. A key contributor towards the upward trend in revenue was mainly the higher selling prices realised during the fourth quarter of 2023 against the fourth quarter of 2023.
Higher selling prices were mainly linked to upward trajectories noted in commodity prices hinting at the gradual recovery phase gaining momentum. Sales volumes also increased by 3 percent compared to the third quarter of 2023 predominantly linked to higher volumes reported by the chlor-alkali segment.
MPHC’s bottom-line profitability decreased by 11 percent sequentially, mainly due to higher costs noted on a quarter-on-quarter basis.
On the other hand, higher production volumes led to overall growth in sales volumes, which contributed by QR23 million positively to MPHC’s net earnings on a quarter-on-quarter basis.
In comparison to the fourth quarter of 2022, a 5 percent decline was noted in MPHC revenue for the fourth quarter of 2023. This decline was primarily attributed to softening of selling prices against a backdrop of relatively negative macroeconomic fundamentals.
Product prices on average declined by 7 percent versus the same quarter of the last year. Sales volumes, on the other hand, improved by 3 percent due to higher production volumes registered in the Group’s Chlor-alkali segment.
Due to an overall decline in revenue, consequently, net earnings for the fourth quarter of 2023 also declined by 21 percent against the fourth quarter of 2022.
Liquidity remained robust with cash and bank balances standing at QR 4.3 billion as of 31 December 2023. The decline in cash and bank balances was mainly due to dividend payments for the financial year 2022, being partially offset by positive cash flow generation during the year ended 31 December 2023.
Total assets as of 31 December 2023 amounted to QR 7.5 billion and total equity amounted to QR 17.1 billion.
The petrochemicals segment recorded a net profit of QR885 million for the current period, marking a 26 percent decrease compared to YTD-22. This decline in profitability was primarily attributable to reduced selling prices.
The segment’s revenue declined by 11 percent, reaching QR2.4 billion during YTD-23 compared to YTD-22. This decrease in revenue resulted from lowered selling prices, partially offset by increased sales volumes. The rise in sales volumes was primarily attributed to higher production, which increased by 8 percent. This growth was driven by a large-scale turnaround at Q-Chem facilities during the first quarter of 2022, impacting production volumes for the same period last year.
After reviewing the Group’s current year financial performance, with present and potential liquidity position, and considering the current and future macroeconomic conditions, business outlook, CAPEX, investing and financing requirements of the Group, the Board of Directors proposed a total annual dividend distribution of QR1.1 billion for 2023.
A dividend of QR0.086 per share represents a dividend yield of 5 percent on the closing share price as of31 December 2023.