Qatar: MPHC reports net profit of $233.24mln for nine-month period

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Doha, Qatar: Mesaieed Petrochemical Holding Company (“MPHC” or “the Group”; QE ticker: MPHC), yesterday announced a net profit of QR849m for the nine-month period ended 30 September 2023, representing a decline of 42% compared to the same period of last year.

This decline in profitability was mainly linked to lowered Group revenue, which declined by 26% and reached QR2.3bn.

The decline in Group revenue is primarily attributed to the decrease observed in average blended product prices, which fell by 23% compared to 9M-22. This decline translated into a QR768m decrease in MPHC’s net earnings for the current period in comparison to the same period of last year. The subdued commodity demand, driven by macroeconomic headwinds and exacerbated by surplus supply, led to a decrease in commodity prices.

EBITDA for the current period amounted to QR1,170m with a decline of 34% versus 9M-22, mainly due to lower revenue. EBITDA margins for 9M-23 reached 51% versus 57% achieved during 9M-22.

MPHC’s bottom-line profitability decreased by 16% sequentially, mainly due to lower revenue noted on a quarter-on-quarter basis which declined by 7%.

Decrease in revenue was mainly linked to lower selling prices which declined by 11%, partially offset by higher sales volume which increased by 4% versus 2Q-23, the persistent fluctuations in the macroeconomic situation are causing ongoing volatility in the prices of most commodities. This downward movement in selling prices led to a negative contribution of QR87m to MPHC’s net earnings for 3Q-23 in comparison to 2Q-23.

On the other hand, higher production volumes led to an overall growth in sales volumes, which contributed by QR32m positively to MPHC’s net earnings on a quarter-on-quarter basis.

Compared to 3Q-22, MPHC revenue for the current quarter decreased by 23%, primarily due to decrease in average selling price which declined by 17%. In addition, sales volumes witnessed a decline by 7%.

The petrochemicals segment recorded a net profit of QR710m for the current period, marking a 26% decrease compared to 9M-22. This decline in profitability was primarily attributable to reduced selling prices, alongside slightly higher operating costs linked to increased production and sales volumes, resulting in unfavorable inventory movements.

On a quarter-on-quarter basis, segmental profits decrease by 25%, mainly linked to lower segmental revenue by 11%.

On the other hand, sales volumes remained flat on quarter-on-quarter basis.

On a sequential basis, segmental profits increased significantly by 108%, primarily due to higher segmental revenue, which rose by 13%. Additionally, selling prices marginally increased by 2% due to a relatively enhanced chlor-alkali market, hinting at the gradual recovery phase gaining momentum. On the other hand, sales volumes increased by 11% on a quarter-on-quarter basis, attributed to higher production resulting from improved plant availability.

In accordance with the State of Qatar’s policy to promote long-term investments and foster a culture of personal savings among its nationals, QatarEnergy has committed that every Qatari national participating in the IPO will receive, for each allocated IPO Share, the conditional right to obtain an Incentive Share free of charge.

Incentive Shares are ordinary MPHC shares and hold equal standing with the offer shares in all aspects. 50% of the Incentive Shares has been granted five years from the IPO date, with the remaining 50% due for award by the end of this year. To be eligible for Incentive Shares, Qatari nationals must maintain at least half of their IPO Shares at all times until these dates. Additionally, to encourage wealth retention for the younger generation, 50% of the shares subscribed for on behalf of minors during the IPO cannot be traded on the Qatar Exchange for as long as these subscribers remain minors.

MPHC will host an IR earnings call with investors to discuss its results, business outlook and other matters on Wednesday, 25th October 2023 at 1:00 p.m. Doha Time. The IR presentation that accompanies the conference call will be posted on the ‘financial information’ page within the Investor Relations section at MPHC’s website.