Mesaieed Petrochemical Holding Company (MPHC or the Group) yesterday announced a net profit of QR443m for the three-month period ended March 31, 2022, representing an increase of 17 percent compared to last year.
Macroeconomic environment remained uneven during the first three months of 2022, where demand for certain petrochemical products slightly inched downward, owing to seasonal effects and buyers’ caution on prices after reaching peak during last year. On the other hand, specifically during latter part of Q1 (first quarter)-22, supply side was affected amid Russia-Ukraine conflict enforcing sharp rise in energy prices.
On overall basis, prices for most MPHC’s products remained essentially balanced, except for NAOs and caustic soda, where strength was noted on the back of elevated end-product prices. However, price trajectories on a year-on-year basis, remained elevated on account of continued support from better economic activity, GDP growth and limited supply.
MPHC’s operations continue to remain robust and resilient with total production for the period reaching 245,000 MTs for Q1-22. Current period’s production volumes declined by 13 percent versus Q1-21, mainly due to a large scale turnaround carried out at Q-Chem’s facilities. On the other hand, production volumes for Q1-22 remained flat in comparison to 4Q-21, where volumes were affected due to a planned preventive maintenance shutdown carried out at the chlor-alkali facilities.
MPHC operating entities continue to demonstrate superior operational agility, as Q-Chem completed a challenging maintenance shutdown with excellent safety results, without a recordable injury.
MPHC reported a net profit of QR443m for the three-month period ended March 31, 2022, up by 17 percent compared to the same period last year. Group revenue improved by 9 percent to reach QR970m, as compared to QR893m for Q1-21. Earnings per share (EPS) amounted to QR0.035 for the three-month period ended March 31, 2022, compared to QR0.030 for Q1-21.
During the quarter, average blended product prices increased by 26 percent compared to Q1-21, translating into an increase of QR209m in MPHC’s net earnings, as compared to Q1-21. Firm product demand supplemented by supply constraints resulted in improved commodity prices. Sales volumes decreased by 14 percent versus Q1-21, mainly driven by lowered plant operating rates, amid large scale turnaround carried at Q-Chem facilities during the current period. Decline in sales volumes translated into a decrease of QR129m in MPHC’s net earnings.
EBITDA for the current period amounted to QR543m with an increase of 13 percent versus Q1-21, mainly due to improvement in revenue along with contained operating cost. EBITDA margins for Q1-22 reached 56 percent versus 54 percent achieved during Q1-21.
Compared to Q4-21, MPHC revenue inched higher by 3 percent, while net profit increased by 5 percent. Key contributor towards the improvement in revenue and net earnings was mainly linked to better sales volumes which increased by 3 percent, amid higher plant operating rates. However, selling prices remained flat during Q1-22 compared to 4Q-21, as effects of higher energy prices were mainly offset by muted demand.
Liquidity remained robust with cash and bank balances standing at QR3bn as at March 31, 2022. Total assets as at March 31, 2022 amounted to QR16.6bn and total equity amounted to QR16.1bn as at March 31, 2022.
Petrochemicals segment reported a net profit of QR247m for Q1-22, down by 1 percent versus Q1-21. This marginal decline in profitability was primarily driven by lowered sales volumes (-21 percent), as the segment carried a largescale turnaround at Q-Chem facilities during Q1-22, which affected the segment’s production volumes to decline by 24 percent.
On the contrary, product prices improved by 23 percent and offset most of the negative impacts relating to lower volumes. Selling prices improved mainly on account of continued momentum from positive macro-drivers carried from latter part of last year. On overall basis, segmental revenue declined by 4 percent versus Q1-21.
On a quarter-on-quarter basis, segmental profits significantly declined by 31 percent, mainly linked to lower sales volumes during Q1-22 which declined by 27 percent. However, average selling prices improved by 6 percent, mainly on account of higher NAO prices which increased by 9 percent, amid better end-product demand, while HDPE prices marginally increased by 1 percent versus 4Q-21.
Chlor-alkali segment reported a net profit of Q • R189m for Q1-22, increased significantly by 51 percent compared to the same period of last year. This notable growth was primarily driven by a significant improvement in blended average selling prices, which increased by 40 percent versus Q1-21, complemented by strength from end-product industries (alumina/ aluminium, polymers, etc.). On overall basis revenue grew by 36 percent within the segment. Production volumes marginally rose by 5 percent versus Q1-21.
On a quarter-on-quarter basis, profitability increased by 223 percent mainly on account of higher sales volumes which increased by 93 percent.
MPHC will host an IR earnings call with investors to discuss its results, business outlook and other matters on April 27, 2022 at 12:30pm Doha Time.
