Tribune News Network
Doha
Industries Qatar on Friday said its operations continue to remain stable and strong as production volumes for the current year improved by 9 percent to reach 16.7 million MTs. The company posted a record net profit of QR8.8 billion for the year ended December 31, 2022, representing an increase of 9 percent from the previous year.
The company said volatile macroeconomic environment due to geopolitical uncertainty amid the Russian-Ukraine conflict, recessionary fears on account of inflationary pressures and hawkish stance on interest rates by most of the Central banks weighed on production.
Also, exceptionally high energy prices in Europe are persistently weighing on most of the European producers. Additionally, China’s zero-Covid policy and related lockdowns, coupled with slowdown in Chinese construction sector remained key catalysts for volatile global economic context during 2022. Specifically on the domestic steel market front, recently concluded activities related to FIFA 2022 World Cup weighed on the domestic steel demand, amid muted construction activity that led to lower price trajectories.
On overall basis, product prices across the Group’s basket of products declined during 4Q-22 versus 3Q-22 due to cautious consumer demand on account of macro-headwinds, coupled with comparatively lower crude prices. However, on a year-on-year basis product price trends remained positive on account of post-pandemic recovery phase, despite macroeconomic fundamentals remained mostly unstable throughout the year.
The Group’s financial performance for the year ended 31 December 2022 was largely attributed to four factors — product prices, sales volumes, other operating income and operating cost.
Product prices
Blended average product prices significantly surged by 18% versus last year and reached USD 711/MT. Growth in product prices contributed to an increase of QR 3.7 billion in the Group’s net earnings. The increase in product prices was mainly linked to elevated market prices across the segments, on account of constructive macroeconomic drivers carried forward from the latter part of the last year. However, macro-economic fundamentals remained volatile during most part of the current year with signs of economic slowdown.
Sales volumes
Sales volumes for the year increased by 8% versus the last year, primarily driven by higher plant operating rates and restarting of certain production facilities. Improved sales volumes contributed QR 2.1 billion in the overall growth of Group’s net earnings for the current year compared to last year.
Other operating income
Group’s financial performance for the current year also improved by QR 1.0 billion in comparison to the last year, due to higher other operating income mainly due to higher share of income from associates (QR 0.4 billion) and better net finance income (QR 0.6 billion).
Operating cost
Operating cost for the year ended 31 December 2022 increased by 44% versus last year. The increase in the operating cost was primarily linked to higher variable cost on account of increased sales volumes and end-product price indexed raw material cost, together with a general increase in inflation linked fixed costs.
During 4Q-22, the Group revenue marginally declined due to slightly lower sales volumes, while the average selling prices remained relatively flat, despite global economic context remained under stress due to recessionary fears and continuing geopolitical tensions, which kept most of the macroeconomic indicators volatile throughout latter part of 2022. On the other hand, net profit improved by 10% due to lower operating costs, partially offset by lowered sales volumes.
Compared to 4Q-21, the Group revenue for 4Q-22 decreased by 6% primarily due to softening of selling prices on the backdrop relatively negative macroeconomic fundamentals. Product prices on average declined by 20% versus same quarter of the last year, where lower price trajectories were noted across all operating segments.Sales volumes, on the other hand, improved by 18% due higher production as the Group’s polyethylene segment was on a planned periodic largescale shutdown during the fourth quarter of 2021, in addition to the fertilizer segment which witnessed higher number of planned and unplanned maintenance days during 4Q-21.Profitability, as measured by EBITDA declined by 28% predominantly linked to lower product prices, along with the Group’s operating costs which increased due to persistent inflationary pressures. Net earnings for 4Q-22 also declined versus 4Q-21 due to lowered revenue and higher operating costs.
Group’s financial position continue to remain robust, with cash and bank balances at QR 19.2 billion as of 31 December 2022, after accounting for a dividend payout relating to the financial year 2021 amounting to QR 6.05 billion. Currently, the Group has no long-term debt obligations.
Group’s reported total assets and total equity reached QR 45.0 billion and QR 42.0 billion, respectively, as at 31 December 2022. The Group generated positive operating cash flows of QR 9.9 billion, with free cash flows1 of QR 8.8 billion during the reporting period of 2022.