Tribune News Network
Doha
Mesaieed Petrochemical Holding Company (MPHC) has reported a net profit of QR 398 million for the six-month period ending June 30, 2024. This figure represents a 32 percent decline compared to the same period in 2023, reflecting ongoing challenges in the global economic landscape.
Macroeconomic climate remained wavered during the first half of 2024, as market sentiment remains dedicated by uncertainty toward global economies recovery, in addition to recessionary fears linked to inflation related pressures and higher interest rateenvironment.
On overall, commodity prices for MPHC’s basket of products declined on a year-on-year basis mainly due to cautious approach from buyers amid macro-headwinds, coupled with comparatively lower energy prices. On quarter-on-quarter basis, prices have inched up as global economies are showing signs of gradual recovery.
Cash and bank balances are reported based on non-IFRS based proportionate consolidation, including share of cash and bank balances from joint ventures.
MPHC’s operations continue to remain robust and resilient with total production for the current period reaching 554 thousand MTs. Production for the first half of 2024 increased by 4 percent against the first half of 2023, mainly due to a maintenance turnaround carried out at QVC facilities during the first half of 2023 which affected production volumes of comparable period.
On a quarter-on-quarter basis, production volumes for the second quarter of 2024 declined marginally by 2 percent in comparison to the first quarter of 2024, mainly due to a decline noted in production volumes from petrochemicals segment, linked to maintenance turnaround.
MPHC reported a net profit of QR 398 million for the six-month period ended 30 June 2024, down by 32 percent compared to the last year. This decline in profitability was mainly linked to decline in selling prices by 13 percent resulting in lower revenue by 7 percent to reach QR1.4 billion.
Drop in Group revenue was mainly linked to the decrease noted in average blended product prices, which declined by 13 percent compared to the first half of 2024, translating into a negative price variance of QR126 million in MPHC’s current period net earnings as compared to the same period of last year. Subdued product demand amid macroeconomic uncertainties resulted in lowered commodity prices.
On the other hand, sales volumes increased by 8 percent against the first half of 2023, mainly driven by higher sales volumes reported by the chlor-alkali segment partially offset by lower sales volumes reported by the petrochemicals segment.
Positive movement in sales volumes translated into an increase of QR27 million in MPHC’s net earnings in the first half of 2024 against the same period of last year.
While EBITDA for the current period amounted to QR627 million noted a decline of 21 percent against the first half of 2023, mainly due to lower revenue. EBITDA margins for the first half of 2024 reached 44 percent against 52 percent achieved during the first half of 2024 mainly affected by the decline in selling prices.
MPHC’s bottom-line profitability increased by 5 percent against the first quarter of 2024, mainly due to higher revenue where an incline of 3 percent was noted on a quarter-on-quarterbasis.
Increase in revenue was mainly linked to higher selling prices by 2 percent, and marginally higher sales volumes by 1 percent against the first quarter of 2024, as result of increased production volumes from Chlor-alkali segment fully offsetting the decline in petrochemicals segment linked to maintenance turnaround during the quarter. This translated into a positive volume variance of QR 5 million.
Selling prices improved marginally by 2 percent compared to previous quarter, mainly on the backdrop of relatively enhanced supply-demand dynamics translating to a positive price variance of QR15 million.
MPHC’s bottom-line profitability declined by 35 percent against the second quarter of 2023, mainly due to lower revenue by 11 percent compared to the same quarter of last year.
Decline in revenue was driven by lower selling prices by 11 percent on the backdrop of challenging macroeconomic environment versus same quarter of last year. EBITDA was impacted due to lower gross margins primarily attributed to higher operating cost and general inflation.
Liquidity remained robust with cash and bank balances standing at QR3.4 billion as at June 30 2024. Decline in cash and bank balances was mainly due to dividend payment for the financial year 2023, being partially offset by positive cash flow generation during first half 2024. Total assets as at 30 June 2024 amounted to QR16.8 billion and total equity amounted to QR16.4 billion.
Petrochemicals segment reported a net profit of QR289 million for the current period, down by 42 percent against the first half of 2023. This decline in profitability was primarily driven by lower revenue.
Segment’s revenue was down by 15 percent for the first half of 2024 against the first half of 2023 to reach QR1 billion, mainly driven by lower selling prices and lower sales volumes. Drop in sales volumes was mainly linked to lower production which declined by 12 percent due to lesser plant availability.
Product prices also declined by 8 percent, mainly due to backdrop of deteriorating macroeconomic fundamentals versus the same period of last year.
On a quarter-on-quarter basis, segmental profits increased by 9 percent, mainly due to higher revenue by 4 percent. Higher revenue was driven by improved selling prices by 6 percent as supply and demand dynamics gradually improves in polyethene market.
Sales volumes marginally declined by 2 percent on a quarter-on-quarter basis, on the backdrop of lower production.
Chlor-alkali segment reported a net profit of QR36 million for the current period, higher by 15 percent compared to same period of last year. Selling prices dropped by 6 percent, as challenges due to macroeconomic uncertainties persisted during this period versus the same period of last year.
On the other hand, sales volumes reported a significant increase driven by higher production on account of better plant availability in chlor-alkali facilities. The increase in production and subsequently the sales volumes have significantly boosted the revenue by 31 percent to reach QR383 million.
On a quarter-on-quarter basis, profitability for the second quarter of 2024 remained flat against the first quarter of 2024 reflecting comparable revenue to previous quarter. The increase in sales volumes has been fully offset against the decline in average selling price.
Today, the board of directors decided a total interim cash dividend distribution of QR 339 million equivalent to QR0.027 per share representing 2.7 percent of nominal share value for the period ended 30 June 2024.
According to relevant regulations, the interim cash dividends will be paid to shareholders as at the close of trading on 20th August 2024. Edaa will handle the payment of interim dividends in accordance with applicable rules and regulations.