- Group revenue reached QR 721 million for the three-month period ended 31 March 2023
- Earnings per share (EPS) amounted to QR 0.021 for the three-month period ended 31 March 2023
- Macroeconomic headwinds weighed on the product prices, affecting 1Q-23 financial results
- Production volumes for 1Q-23 were affected by QVC’s maintenance turnaround
- Robust liquidity position with closing cash and bank balances1 amounting to QR 3.5 billion as of 31 March 2023
According to the company’s website press release on May 7, 2023, Mesaieed Petrochemical Holding Company (“MPHC” or “the Group”; QE ticker: MPHC) announced a net profit of QR 269 million for the three-month period ended 31 March 2023, representing a decline of 39% compared to 1Q-22.
Updates on macroeconomic environment
Macroeconomic climate remained wavered during the first quarter of 2023, marked by several factors carried forward from last year which affected the commodity markets, including geopolitical conflicts, and recessionary fears linked to inflation related pressures and higher interest rate environment. Additionally, China’s slow paced post-COVID recovery phase, along with a recent fall in natural gas prices is bringing an additional layer of uncertainty to the commodity markets.
On overall, commodity prices for MPHC’s basket of products declined on a year-on-year basis, following last two year’s significantly high price environment mainly due to cautious approach from buyers amid macro-headwinds, coupled with comparatively lower energy prices. However, prices improved to an extent versus 4Q-22, mainly on the back of relatively better supply-demand dynamics.
MPHC’s operations continue to remain robust and resilient with total production for the current period reaching 239 thousand MTs. Production for 1Q-23 slightly declined versus 1Q-22, mainly due to a maintenance turnaround carried out at QVC facilities during 1Q-23 which affected production volumes for 1Q-23.
On a quarter-on-quarter basis production volumes for 1Q-23 declined by 17% in comparison to 4Q-22, mainly due to a decline noted in production volumes from chlor-alkali segment, linked to maintenance turnaround.
Financial performance updates – 1Q-23 vs 1Q-22
MPHC reported a net profit of QR 269 million for the three-month period ended 31 March 2023, down by 39% compared to the last year. This decline in profitability was mainly linked to lowered Group revenue, which declined by 26% and reached QR 721 million.
Decline in Group revenue was mainly linked to the decrease noted in average blended product prices, which declined by 21% compared to 1Q-22, translating into a decline of QR 224 million in MPHC’s current period net earnings as compared to the same period of last year. Subdued product demand amid macroeconomic headwinds, along with excess supply resulted in lowered commodity prices.
Sales volumes also declined by 6% versus 1Q-22, mainly driven by lowered sales volumes reported by the chloralkali segment, being partially offset by higher volumes reported by the petrochemicals segment. Negative movement in sales volumes translated into a decline of QR 32 million in MPHC’s 1Q-23 net earnings versus the same period of last year.
EBITDA for the current period amounted to QR 372 million with a decline of 31% versus 1Q-22, mainly due to lower revenue. EBITDA margins for 1Q-23 reached 52% versus 56% achieved during 1Q-22.
Financial performance – 1Q-23 vs 4Q-22
MPHC’s bottom-line profitability declined by 9% versus 4Q-22, mainly due to lowered revenue where a decline of 16% was noted on a quarter-on-quarter basis.
Decline in revenue was mainly linked to lowered sales volumes which decreased by 20% versus 4Q-22, as production volumes declined mainly linked to maintenance turnaround in Chlor-alkali facilities. Lower sales volumes contributed QR 169 million negatively to the MPHC’s net earnings on a quarter-on-quarter basis.
On the other hand, selling prices increased by 5%, mainly on the back of relatively better supply-demand dynamics. This positive movement in selling prices led to a positive contribution of QR 36 million to MPHC’s net earnings for 1Q-23 in comparison to 4Q-22.
Positive variance in others is mainly relating to lower variable costs which decreased substantially due to significant decrease in volumes.
Financial position
About MHPC
Mesaieed Petrochemical Holding Company Q.P.S.C. (“MPHC”) was incorporated as a Qatari joint stock company on May 29, 2013 with an agreed effective date for the transfer of QatarEnergy’s (formerly known as Qatar Petroleum) previous shareholding in the joint ventures of September 1, 2013. The registered office is located at P.O. Box 3212, Doha, State of Qatar.
The main activity of MPHC is to act as a holding company: (i) Q-Chem is currently owned by MPHC (49%), Chevron Phillips Chemical International Qatar Holdings L.L.C. (“CPCIQH”) (49%) and QatarEnergy (2%), and has one whollyowned subsidiary, Q-Chem Distribution Company Limited,(ii) Q-Chem II is currently owned by MPHC (49%), CPCIQH (49%) and QatarEnergy (2%), and has one wholly-owned subsidiary, Q-Chem II Distribution Company Limited, and an effective ownership interest of 53.85% in a joint venture, Ras Laffan Olefins Company Limited, which supplies ethylene to Q-Chem II; and (iii) QVC, which was incorporated in 1997 as a joint venture, and is currently owned by MPHC (55.2%), Qapco (31.9%) and QatarEnergy (12.9%).
For more information about the earnings announcement, e-mail mphc@qatarenergy.qa or visit www.mphc.com.qa
DISCLAIMER
The companies in which Mesaieed Petrochemical Holding Company Q.P.S.C. directly and indirectly owns investments are separate entities. In this press release, “MPHC” and “the Group” are sometimes used for convenience in reference to Mesaieed Petrochemical Holding Company Q.P.S.C.
This presentation may contain forward-looking statements concerning the financial condition, results of operations and businesses of Mesaieed Petrochemical Holding Company Q.P.S.C. All statements other than statements of historical fact are deemed to be forward-looking statements, being statements of future expectations that are based on current expectations and assumptions, and involve known and unknown risks and uncertainties that could cause actual results, operations and business performance or events impacting the group to differ materially from those expressed or as may be inferred from these statements.
There are a number of factors that could affect the realisation of these forward-looking statements such as: (a) price fluctuations in crude oil and natural gas, (b) changes in demand or market conditions for the group’s products, (c) loss of market share and industry competition, (d) environmental risks and natural disasters, (e) changes in legislative, fiscal and regulatory conditions, (f) changes in economic and financial market conditions and (g) political risks. As such, results could differ substantially from those stated, or as may be inferred from the forward-looking statements contained herein. All forward-looking statements contained in this presentation are made as of the date of this presentation.
Mesaieed Petrochemical Holding Company Q.P.S.C., its Directors, officers, advisors, contractors and agents shall not be liable in any way for any costs, losses or other detrimental effects resulting or arising from the use of or reliance by any party on any forward-looking statement and / or other material contained herein. Mesaieed Petrochemical Holding Company Q.P.S.C., its joint ventures and associated companies are further in no way obliged to update or publish revisions to any forward-looking statement or any other material contained herein which may or may not be known to have changed or to be inaccurate as a result of new information, future events or any reason whatsoever. Mesaieed Petrochemical Holding Company Q.P.S.C. does not guarantee the accuracy of the historical statements contained herein.
GENERAL NOTES
Mesaieed Petrochemical Holding Company’s accounting year follows the calendar year. No adjustment has been made for leap years. Values expressed in QR billions and percentages have been rounded to 1 decimal point. All other values have been rounded to the nearest whole number. Values expressed in US $’s have been translated at the rate of US $1 = QR3.64.
Amounts relating to income statement, including revenue, net profits, production, sales volumes, have been computed and reported for the purposes of this press release on proportionate basis, based on the share of ownership of MPHC in its respective joint ventures.
DEFINITIONS
Cash Realisation Ratio: Cash Flow From Operations / Net Profit x 100 • Debt to Equity: (Current Debt + Long-Term Debt) / Equity x 100 • Dividend Yield: Total Cash Dividend / Closing Market Capitalisation x 100 • EDC: Ethylene Dichloride • EPS: Earnings per Share (Net Profit / Number of Ordinary Shares outstanding at the year end) • EBITDA: Earnings Before Interest, Tax, Depreciation and Amortisation • Free Cash Flow: Cash Flow From Operations - Total CAPEX • HCL: Hydrochloric Acid • HDPE: High Density Polyethylene • NAO: Normal Alpha Olefins • NaOH: Caustic Soda • MT / PA: Metric Tons Per Annum • Payout Ratio: Total Cash Dividend / Net Profit x 100 • P/E: Price to Earnings (Closing market capitalisation / Net Profit) • Utilisation: Production Volume / Rated Capacity x 100 • VCM: Vinyl Chloride Monomer
