05.02.2015, 13:48
INDUSTRIES QATAR DISCLOSES 2014 FINANCIALS WITH QR 6.34 BILLION IN NET PROFIT AND RECOMMENDS 70% CASH DIVIDEND
OREANDA-NEWS. Industries Qatar
(“IQ” or “the group”; QE: IQCD)
, one of the region’s industrial
giants with interests in the production of a wide range of petrochemical, fertiliser
and steel
products, announced its financial results for the year ended 31 December, 2014 with net
profit of QR 6.3 billion.
Results in the second half of the year showed a significant improvement over the first half of 2014 with the return to normal opera tions following the extensive maintenance downtime experienced across all segments: consolidated net profit improved by QR 0.7 billion, or 23.5%, with the petrochemical and fertiliser segments registering growth of 48.7% and 31.9% respectively. Second ha lf earnings were also on par with the second half of 2013, clearly showing the group’s ability to generate robust profits and cash flow even during the difficult international market conditions experienced during the latter part of this year.
Financial Results
Earnings in 2014 were supported by the launch and subsequent ramp - up of Qatar Steel’s EF - 5 facility in the first quarter and Qafac’s CDR plant in the third quarter, as well as by strong full year average key petrochemical product prices. However, the group faced significant challenges from extended, planned shut - downs noted across all plants during the first half of the year, continued weak urea prices, and heightened operating costs. It is important to emphasise that the planned and unplanned shutdo wns and challenging market conditions experienced were largely expected and accounted for in the group’s 2014 budget, and are normal features of the industries the group operates within; furthermore, full year results were ahead of the group’s 2014 budget.
Revenue
Reported revenue under IFRS 11 (Joint Arrangements) for the year ended December 31, 2014 was QR 6.0 billion, an marginal increase of QR 0.1 billion, or 2.5%, over the previous year; on a like - for - like basis, management reporting revenue - assuming proportionate consolidation under IAS 31 - was QR 18.2 billion, a decrease of QR 1.0 billion, or 5.4%, versus the same period of 2013.
Reported revenue for the fourth quarter was QR 1.3 billion, a moderate decrease of QR 0.2 billion, or 15.4%, versus the third quarter. Assuming proportionate consolidation, management reporting revenue was QR 4.7 billion, a decrease of QR 0.1 billion, or 2.9%, against the third quarter.
The petrochemical segment closed the year with revenue of QR 6.8 billion assuming proportionate consolidation under IAS 31, a year - on - year decrease of QR 0.5 billion, or 6.8%. Full year weighted average key petrochemical product prices, particularly LDPE and LLDPE were up year - on - year, largely compensating the impact of the extensive, planned and unplanned shut - downs experienced across all plants within the segment, particularly during the first six months of 2014.
Petrochemical revenue for the fourth quarter of 2014 was QR 1.8 billion, a decrease of QR 0.2 billion, or 9.2%, on the previous quarter. This quarter - on - quarter decrease can be largely attributed to moderate price deflation across key products as the plunge in oil prices that began in early Q4, 2014 started to impact global petrochemical prices. Sales volume s, however, remained flat versus the third quarter of 2014 following the extensive planned and unplanned shutdowns in the first half of 2014.
Fertiliser Segment
The fertiliser segment closed the year ended December 31, 2014 with revenue of QR 5.5 billion, a reduction of QR 0.7 billion, or 11.2%, against the same period of 2013. The year - on - year decline in fertiliser revenue follows significant sales volume reductions mainly due to planned and warranty shut - downs across several fertiliser trains, and moder ately weak weighted average urea prices.
Revenue in the fourth quarter was QR 1.6 billion, significantly up on the last quarter by QR 0.3 billion, or 21.1%. Fourth quarter segmental revenue was aided by a moderate spike in global ammonia prices, and the r eturn to historical utilisation levels in the segment’s urea facilities following the previous quarter’s extensive unplanned downtime. Segmental production utilisation in the fourth quarter was 98.5%, moderately down by 3.2 percentage points over the last quarter due to unplanned downtime in the segment’s ammonia facilities.
Steel Segment
Revenue in the steel segment totaled QR 6.0 billion for the twelve months ended December 31, 2014, a moderate increase of QR 0.1 billion, or 2.5%, compared to the same p eriod of 2013. The benefit to the group’s steel business of the launch and ramp - up of the new EF - 5 facility in the first quarter of 2014 was partially offset by moderate re - bar price decline, reduced operating days due to planned and unplanned disruption, and strong prior year comparatives.
Revenue in the fourth quarter was QR 1.3 billion, a decrease of QR 0.2 billion, or 15.4%, versus the third quarter. The adverse variance occurred due to reduction both sales volume and key product prices. Production l evels were also down on increased downtime, with the quarterly segmental utilisation rate moving to 92% from 110%.
Profits and Margins
Consolidated EBITDA for the year ended December 31, 2014 was QR 6.6 billion , a decrease of QR 1.6 billion, or 19.4%, on the prior year. On a like - for - like basis, EBITDA - assuming proportionate consolidation under IAS 31 - was QR 8.0 billion, a decrease of QR 1.5 billion, or 16.2%, versus 2013. The adverse year - on - year variance resulted as the business was impacted by reduced sales volumes following extensive planned preventive maintenance and warranty shut - downs during the year, weak urea prices and heightened operating costs in the petrochemical and steel segments. Net profit for the year under review was QR 6.3 billion, a decrease of QR 1.7 billion, or 20.8%, against 2013, with the adverse year - on - year movement attributable to the same reasons as the EBITDA variance.
Consolidated EBITDA reported for the fourth quarter was QR 1 .7 billion, a moderate decrease of QR 0.2 billion, or 10.7%, on the third quarter of 2014. This reduction in earnings was principally price - driven from the petrochemical segment following the plunge in oil prices that began in early Q4, 2014 as it started to impact global petrochemical prices. . Profit for the fourth quarter was QR 1.6 billion, a decrease of QR 0.3 billion, or 13.6%, versus the prior quarter, with the quarter - on - quarter movement due to the same reasons as the EBITDA variance.
Proposed Dividend Distribution
Since the initial public offering in April 2003, the Board of Directors has supported, and continues to support, a generous dividend payout practice that balances the needs and aspirations of shareholders with the necessity of maintaini ng adequate liquidity within the group for adverse market conditions and investment requirements, and the principles of financial prudence.
Accordingly, the Board of Directors, in their meeting held on January 8, 2015 proposed a total annual dividend dist ribution for the year ended December 31, 2014 of QR 4.2 billion, equivalent to a payout of QR 7.00 per share and representing 70% of the nominal value.
Conclusion
The group faced significant challenges in 2014 with the extensive major shutdown program, and weak fertiliser prices. However, the full year results are testament to the financial and operational resilience of the group, as earnings nevertheless still surpassed budgeted expectations by over 12.0%. The group looks forward to 2015 with a firm belie f in the group’s competitive advantages and the knowledge that Industries Qatar is in a financially - sound position and is well - equipped for the future.
Results in the second half of the year showed a significant improvement over the first half of 2014 with the return to normal opera tions following the extensive maintenance downtime experienced across all segments: consolidated net profit improved by QR 0.7 billion, or 23.5%, with the petrochemical and fertiliser segments registering growth of 48.7% and 31.9% respectively. Second ha lf earnings were also on par with the second half of 2013, clearly showing the group’s ability to generate robust profits and cash flow even during the difficult international market conditions experienced during the latter part of this year.
Financial Results
Earnings in 2014 were supported by the launch and subsequent ramp - up of Qatar Steel’s EF - 5 facility in the first quarter and Qafac’s CDR plant in the third quarter, as well as by strong full year average key petrochemical product prices. However, the group faced significant challenges from extended, planned shut - downs noted across all plants during the first half of the year, continued weak urea prices, and heightened operating costs. It is important to emphasise that the planned and unplanned shutdo wns and challenging market conditions experienced were largely expected and accounted for in the group’s 2014 budget, and are normal features of the industries the group operates within; furthermore, full year results were ahead of the group’s 2014 budget.
Revenue
Reported revenue under IFRS 11 (Joint Arrangements) for the year ended December 31, 2014 was QR 6.0 billion, an marginal increase of QR 0.1 billion, or 2.5%, over the previous year; on a like - for - like basis, management reporting revenue - assuming proportionate consolidation under IAS 31 - was QR 18.2 billion, a decrease of QR 1.0 billion, or 5.4%, versus the same period of 2013.
Reported revenue for the fourth quarter was QR 1.3 billion, a moderate decrease of QR 0.2 billion, or 15.4%, versus the third quarter. Assuming proportionate consolidation, management reporting revenue was QR 4.7 billion, a decrease of QR 0.1 billion, or 2.9%, against the third quarter.
The petrochemical segment closed the year with revenue of QR 6.8 billion assuming proportionate consolidation under IAS 31, a year - on - year decrease of QR 0.5 billion, or 6.8%. Full year weighted average key petrochemical product prices, particularly LDPE and LLDPE were up year - on - year, largely compensating the impact of the extensive, planned and unplanned shut - downs experienced across all plants within the segment, particularly during the first six months of 2014.
Petrochemical revenue for the fourth quarter of 2014 was QR 1.8 billion, a decrease of QR 0.2 billion, or 9.2%, on the previous quarter. This quarter - on - quarter decrease can be largely attributed to moderate price deflation across key products as the plunge in oil prices that began in early Q4, 2014 started to impact global petrochemical prices. Sales volume s, however, remained flat versus the third quarter of 2014 following the extensive planned and unplanned shutdowns in the first half of 2014.
Fertiliser Segment
The fertiliser segment closed the year ended December 31, 2014 with revenue of QR 5.5 billion, a reduction of QR 0.7 billion, or 11.2%, against the same period of 2013. The year - on - year decline in fertiliser revenue follows significant sales volume reductions mainly due to planned and warranty shut - downs across several fertiliser trains, and moder ately weak weighted average urea prices.
Revenue in the fourth quarter was QR 1.6 billion, significantly up on the last quarter by QR 0.3 billion, or 21.1%. Fourth quarter segmental revenue was aided by a moderate spike in global ammonia prices, and the r eturn to historical utilisation levels in the segment’s urea facilities following the previous quarter’s extensive unplanned downtime. Segmental production utilisation in the fourth quarter was 98.5%, moderately down by 3.2 percentage points over the last quarter due to unplanned downtime in the segment’s ammonia facilities.
Steel Segment
Revenue in the steel segment totaled QR 6.0 billion for the twelve months ended December 31, 2014, a moderate increase of QR 0.1 billion, or 2.5%, compared to the same p eriod of 2013. The benefit to the group’s steel business of the launch and ramp - up of the new EF - 5 facility in the first quarter of 2014 was partially offset by moderate re - bar price decline, reduced operating days due to planned and unplanned disruption, and strong prior year comparatives.
Revenue in the fourth quarter was QR 1.3 billion, a decrease of QR 0.2 billion, or 15.4%, versus the third quarter. The adverse variance occurred due to reduction both sales volume and key product prices. Production l evels were also down on increased downtime, with the quarterly segmental utilisation rate moving to 92% from 110%.
Profits and Margins
Consolidated EBITDA for the year ended December 31, 2014 was QR 6.6 billion , a decrease of QR 1.6 billion, or 19.4%, on the prior year. On a like - for - like basis, EBITDA - assuming proportionate consolidation under IAS 31 - was QR 8.0 billion, a decrease of QR 1.5 billion, or 16.2%, versus 2013. The adverse year - on - year variance resulted as the business was impacted by reduced sales volumes following extensive planned preventive maintenance and warranty shut - downs during the year, weak urea prices and heightened operating costs in the petrochemical and steel segments. Net profit for the year under review was QR 6.3 billion, a decrease of QR 1.7 billion, or 20.8%, against 2013, with the adverse year - on - year movement attributable to the same reasons as the EBITDA variance.
Consolidated EBITDA reported for the fourth quarter was QR 1 .7 billion, a moderate decrease of QR 0.2 billion, or 10.7%, on the third quarter of 2014. This reduction in earnings was principally price - driven from the petrochemical segment following the plunge in oil prices that began in early Q4, 2014 as it started to impact global petrochemical prices. . Profit for the fourth quarter was QR 1.6 billion, a decrease of QR 0.3 billion, or 13.6%, versus the prior quarter, with the quarter - on - quarter movement due to the same reasons as the EBITDA variance.
Proposed Dividend Distribution
Since the initial public offering in April 2003, the Board of Directors has supported, and continues to support, a generous dividend payout practice that balances the needs and aspirations of shareholders with the necessity of maintaini ng adequate liquidity within the group for adverse market conditions and investment requirements, and the principles of financial prudence.
Accordingly, the Board of Directors, in their meeting held on January 8, 2015 proposed a total annual dividend dist ribution for the year ended December 31, 2014 of QR 4.2 billion, equivalent to a payout of QR 7.00 per share and representing 70% of the nominal value.
Conclusion
The group faced significant challenges in 2014 with the extensive major shutdown program, and weak fertiliser prices. However, the full year results are testament to the financial and operational resilience of the group, as earnings nevertheless still surpassed budgeted expectations by over 12.0%. The group looks forward to 2015 with a firm belie f in the group’s competitive advantages and the knowledge that Industries Qatar is in a financially - sound position and is well - equipped for the future.
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