Tribune News Network
Doha
Mesaieed Petrochemical Holding Company (MPHC) on Monday announced a net profit of QR567 million for the nine-month period ended 30 September 2024, representing a decline compared to 9M-23.
The decline in profitability was primarily attributed to lower selling prices, which resulted in reduced Group revenue. The drop in Group revenue was mainly linked to a decrease in average blended product prices, coupled with a decline in profit margins.
Despite the overall revenue decline, MPHC experienced an increase in sales volumes compared to 9M-23.
This increase was primarily driven by higher sales volumes reported in the chlor-alkali segment, which fully offset lower sales volumes in the petrochemicals segment. This positive movement in sales volumes translated favorably into MPHC’s 9M-24 net earnings compared to the same period last year.
However, EBITDA for the current period noted a decline versus 9M-23, mainly due to lower revenue. Additionally, the drop in production and subsequent sales volumes within the petrochemical segment, coupled with a decline in the average selling prices, negatively impacted the group’s overall EBITDA and EBITDA margins for 9M-24 compared to the same period last year. These factors collectively contributed to the decreased financial performance observed in the nine-month period of 2024.
Overall, the financial results were impacted by lower earnings from the petrochemical segment compared to the same period last year. This decline was partially mitigated by improved performance in the chlor-alkali segment, which showed better earnings year-over-year. The overall performance of these two segments resulted in a net negative effect on the company’s overall results.
MPHC’s bottom-line profitability declined compared to the previous quarter, primarily due to lower group revenue.
The decline in revenue was mainly attributed to marginally lower selling prices and reduced sales volumes. The selling price impacted particularly the petrochemical segment. Overall sales volume witnessed a decline, primarily driven by the petrochemical segment, where lower production due to reduced utilization resulted in decreased sales volume.
EBITDA and EBITDA margins were negatively affected by a declining trend in selling prices, driven by challenging market conditions.
Additionally, sales volumes decreased primarily due to lower production within the petrochemical segment during the quarter. This reduction in both selling prices and sales volume, in turn, impacted margins compared to the previous quarter. The combination of lower selling prices and reduced production efficiency contributed to the overall decline in EBITDA performance.
MPHC’s bottom-line profitability declined compared to the same quarter last year, primarily due to lower revenue. This decline in revenue was driven by two main factors: lower selling prices and reduced sales volumes.
The lower selling prices were a result of the challenging macroeconomic environment compared to the same quarter last year. Meanwhile, sales volumes were impacted due to lower operating rates in the current quarter, in contrast to the better rates witnessed during the same period last year. Additionally, EBITDA was negatively affected by lower gross margins, which were primarily attributed to higher operating costs and general inflation. These factors collectively contributed to the overall decline in MPHC’s financial performance compared to the same quarter of the previous year.
MPHC maintained robust liquidity with substantial cash and bank balances.
However, there was a decline in these balances primarily due to two factors: the dividend payment for the financial year 2023 and the interim dividend for 2024 in addition to the payment of MPHC portion in the financing of the PVC project. This decrease was partially offset by positive cash flow generation during the nine-month period of 2024.
The Petrochemicals segment reported a net profit of QR 394 million for 9M-24, down in comparison to the same period last year. This significant decline in profitability was primarily driven by lower revenue. Segment’s revenue declined during 9M-24 versus 9M-23, mainly driven by lower selling prices and lower sales volumes. The drop in sales volumes w
as primarily linked to lower production, due to reduced plant availability. Product prices also declined, mainly due to deteriorating macroeconomic fundamentals compared to the same period last year.
These factors presented challenges in terms of margins, further affecting profitability compared to the same period last year. The decline in petrochemical prices and demand is consistent with global trends, as the industry faced challenges throughout 2023 and into 2024 due to softening demand, increased global capacity, and historically low earnings across various chemical value chains.
On a quarter-on-quarter basis, segmental profits declined, primarily due to further margin compression and lower revenue. The revenue decrease was driven by two factors: firstly, a decline in selling prices as supply and demand dynamics in the polyethylene market trended towards equilibrium; and secondly, reduced sales volumes.
The volume reduction was a result of lower production output and outages within QChem facilities.
These combined factors – price pressure, volume constraints, and the resulting margin squeeze – contributed to the overall decline in the segment’s quarterly performance The Chlor-alkali segment reported a net profit of QR 68 million for the current period, an increase compared to the same period last year. Despite marginally lower selling prices due to persistent macroeconomic uncertainties, the segment’s performance improved significantly.
This improvement was primarily driven by a substantial increase in sales volumes, resulting from higher production output due to better plant availability in chlor-alkali facilities.