Fourth-quarter profit for Industries Qatar, the group controlling Qatar's petrochemical, fertiliser and steel sectors, fell 19 per cent compared with the same period a year earlier.
Industries Qatar hopes for rebound as profit falls
Fourth-quarter profit for Industries Qatar (IQ), the group controlling Qatar's petrochemical, fertiliser and steel sectors, fell 19 per cent compared with the same period a year earlier.
Net income fell to 1.7 billion rials (Dh1.71bn), IQ announced yesterday.
Falling petrochemical prices, a drop in revenue in its steel business and expenses arising from a project delay contributed to the profit decline. Full production at IQ's new fertiliser plant, Qafco 5, and a rebound in petrochemical demand will lead to better financial results in the current quarter, analysts said.
"I think [the first quarter] will be better," said Ahmed Shams El Din, the director of equity research at EFG-Hermes. "Fertiliser prices are down, but they will have Qafco 5 contributing volumes, which will largely compensate for lower prices. We've seen a rebound in petrochemical prices as Chinese demand picked up."
Qafco 5 is scheduled to reach full production this month, boosting the company's ammonia output by 73 per cent. Construction delays not only deprived IQ of the ability to counter falling prices with increased production, but they also burdened the company with additional expenses under a "take or pay" arrangement with Qatar Petroleum, contracted to supply the plant's gas feedstock.
IQ also suffered from a decline in earnings at its steel business in the fourth quarter, with profit falling by about 30 per cent, said Mr El Din.
Petrochemical prices also fell. Ethylene cost $1,205 a tonne in Japan earlier this month, 6.6 per cent less than the same period a year earlier, according to Bloomberg News.
Falling petrochemical prices also led Saudi Basic Industries Corporation to announce a 10 per cent decline in profit last month.