INDUSTRIES QATAR Q.P.S.C. 
By CONTACT DETAILS:
Name Mr. Abdulrahman Ahmad Al-Shaibi
Title Chief Coordinator Company Industries Qatar QSC ("IQ") Telephone Number (974) 4430-8688
Fax Number (974) 4429-3750
DOCUMENT DETAILS:
Document Reference Quarterly Trading Statement (Q1, 2012)
(IQ/QTS/120419 Eng.docx)
For Immediate Release April 19, 2012
PRESS RELEASE IQ DECLARES STRONG FIRST QUARTER RESULTS Revenue, profit up on last quarterDOHA, QATAR - Industries Qatar ("IQ" or "the group"; QE: IQCD), one of the region's industrial giants with interests in the production, distribution and sale of a wide range of petrochemical, fertiliser and steel products, released its financial results for the period ended March 31, 2012 with revenue of circa QR 4.4 billion and net profit of QR 1.9 billion.
QR Billions IQ Group Revenue And Net Profit
In brief comments issued to the Qatar
Exchange, H.E. Dr. Mohammed Bin Saleh Al-
4.0
2.0
0.0
Revenue
Net Profit
2.7
1.2
4.0
2.1
4.4
1.9
Sada, Minister of Energy and Industry, Chairman and Managing
Director of Industries Qatar, stated "The group has
followed-up its record-breaking 2011 performance with strong
first quarter results. Both revenue and net profit have
improved on the last quarter of
2011, closing at QR 4.4 billion and QR 1.9
Q1 2010 Q1 2011 Q1 2012
billion respectively.
Document Reference: Quarterly Trading Statement (Q1, 2012) Release Date: April 19, 2012
Page: 2 of 7
"In the first quarter, we witnessed the commercial launch of
Qafco 5, the group's 1.0 million metric ton urea facility.
Incremental sales from the plant totaled approximately QR 80
million as the group recognised only about two week's of
commercial sales. However, this facility will undoubtedly
prove to be a major growth driver for the group in the coming
period.
"The second quarter is also expected to benefit from the
launch of Qapco's LDPE-3 facility. When fully operational,
this plant should add 240,000 metric tons of LDPE to the
group's product suite."
The strong first quarter financial results can be primarily
attributed to additional fertiliser volumes following the
launch of Qafco 5, high steel utilisation rates1
and resilient EBITDA1 margins.
Revenue
Elaborating on the group's revenue performance, Mr.
Abdulrahman Ahmad Al-Shaibi, Chief Coordinator, Industries
Qatar, said, "The group recorded revenue of QR 4.4 billion
for the period ended March 31, 2012, representing a robust
increase of QR 0.4 billion, or 8.9%, on the same quarter last
year. This increase can be primarily attributed to
volume-driven growth in the fertiliser and steel segments,
following the start of commercial operations in Qafco 5 and
improved production levels in the group's Mesaieed-based
steel operations." Revenue increased over the last quarter of
2011 by QR 0.3 billion, or 9.5%, due to the same volume
drivers and despite price
weakness noticed in the majority of key products.
QR Billions
5.0
4.0
Year-On-Year Revenue Analysis0.3
3.0
2.0
1.0
0.0
2011 Q1 Price Variance Volume Variance 2012 Q1
1 See page 7 for definitions of utilisation and EBITDA.
Document Reference: Quarterly Trading Statement (Q1, 2012) Release Date: April 19, 2012
Page: 3 of 7
Segmental Overview
Petrochemical revenue in the first quarter of the year was QR
1.3 billion, down QR 0.1 billion, or
8.0%, on the first quarter of 2011. Almost 80% of the
segment's negative year-on-year performance was due to an
adverse volume variance on account of planned and unplanned
shutdowns in the fuel
additives joint venture. In total, the joint venture
$
1,800
1,500
1,200
900
600
300
0
1,527
Key Product Price: LDPE*1,705
1,496
1,393
* Quarterly weighted average pric es
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
lost 69 days to shut-downs (2011, Q1: 0 days), with
2010
2011
2012
28 days of unplanned shut-downs related to one- off,
non-recurring problems in the early part of the quarter.
Expectations are that utilisation rates will return to normal
in the second quarter of 2012. There were no other material
shut-downs noted in the segment during the quarter. Due to
the above,
the segmental utilisation rate dipped to below 90%
$
1,200
900
600
300
0
808
Key Product Price: MTBE*1,209
972
1,089
* Quarterly weighted average pric es
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
for the first time since the first half of 2010.
2010
2011
2012
Overall, product prices were marginally down on the same
period last year with the notable exception of LDPE which
experienced an 18.3% drop from the record highs of 2011.
Versus the previous reporting quarter, petrochemical revenue
dipped by QR 0.3 billion, or 19.1%, split between an adverse
volume variance of QR 0.4 billion and a marginally positive
price variance. Quarter-on-quarter volumes declined partly
due to the return to normalcy in the current quarter
following record LDPE and LLDPE sales volumes in the previous
quarter, and because of the effect of the fuel additives
planned and unplanned shut-downs.
The fertiliser segment closed the quarter with revenue of QR
1.3 billion, up QR 0.2 billion, or 14.5%, on the same period
last year. The segment's year-on-year performance was largely
due to the combined effect of additional urea volume
following the commercial launch of Qafco 5, a reduced number
of shut-down days in 2012 and moderately positive
year-on-year price inflation. Qafco 5's first commercial
sales were booked on March 12, 2012 following its start-up in
mid-February. A total of 44,000 metric tons of urea sales
were recognised during the quarter, and the plant closed the
quarter while operating at 86% utilisation. Expectations are
that the plant will continue its rapid ramp-up and will hit
normal utilisation levels during the second quarter of 2012.
Document Reference: Quarterly Trading Statement (Q1, 2012) Release Date: April 19, 2012
Page: 4 of 7
Sales volumes during the quarter were also boosted by a reduced number of shut-down days: 16 days (ammonia) and 14 days (urea) in 2012 versus 26 (ammonia) and 21 (urea) days in the first quarter of 2011.
$
600
500
400
Key Product Price: Urea *485
372
Against the fourth quarter of 2011, segmental revenue was up by QR 0.2 billion, or 18.8%, as incremental ammonia and urea volumes from Qafco 5 offset the rapid tailoring off of the key
300
200
100
0
303
414
* Quarterly weighted average pric es
product price rally that began in the last quarter of
2010, as well as the loss of production due to routine
shut-downs. Key product prices in the
first quarter were down between 10% and 40% on
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2010
2011
2012
the previous quarter, due to muted global demand
coupled with supply-side pressures.
$
With respect to the steel segment, Mr. Al-Shaibi
remarked, "The steel segment recorded its second
800
600
400
200
507
732 755
734
highest quarterly revenue since the group's inception in
2003, with over QR 1.7 billion of steel sales registered in
the first quarter of 2012. In
doing so, the segment also became the group's
* Quarterly weighted average pric es
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
largest revenue contributor, accounting for almost
40% of total sales. This excellent result is
2010
2011
2012
indicative of strong local and regional demand for
Qatar Steel's products, and bodes well for the future as the
segment is expected to significantly benefit from the
progressive and wide-ranging infrastructure plans of the
State of Qatar."
First quarter steel revenue was QR 1.7 billion, an increase
of QR 0.3 billion, or 22.1%, on the same period last year,
and QR 0.5 billion, or 36.2%, over the last quarter of 2011.
The year-on-year and quarter-on-quarter increases were both
largely predicated on production-driven volume increases due
to lower shut-down days, as segmental utilisation closed the
quarter at 107%, up 15 and 18 percentage points against the
first and last quarters of 2011 respectively. The segment
noted flat to low year-on-year key product price growth, and
negative quarter-on-quarter inflation, in continuation of
trends noted in 2011 whereby product prices peaked around the
third quarter and have dropped consistently since.
Document Reference: Quarterly Trading Statement (Q1, 2012) Release Date: April 19, 2012
Page: 5 of 7
Profits And Margins
On the subject of the group's net profit, Mr. Al-Shaibi
remarked, "The group's profits were boosted by the strong
revenue result and improved profitability levels, closing the
quarter with net profit of QR 1.9 billion and EBITDA of QR
2.2 billion. The results were broadly in line with the
group's budgeted expectations. The petrochemical segment was
the main profit contributor, accounting for over 40% of the
group's net profit and EBITDA; but, this is expected to
change as the year
progresses and the group benefits from the launch of Qafco
5's second ammonia train, and Qafco 6."
QR Billions
3.0
52.3%
IQ Group Quarterly Net Profit And Net Profit %49.9% 47.4%
%
60.0%
42.0% 43.7%
50.0%
2.0
2.1
1.7
1.9
40.0%
30.0%
1.0
20.0%
10.0%
0.0
Q1 Q2 Q3 Q4 Q1
0.0%
2011
Net Profit Net Profit % 2012
Net profit and EBITDA were up between 13% and 14% on the
preceding quarter as the volume- driven growth in revenue was
aided by resilient margins. Both net profit margin and EBITDA
% improved in the quarter by circa 2 percentage points to
close at 43.7% and 49.6% respectively, as the previous
quarter was impacted by a number of exceptional items,
including the write-off of certain project under development
costs (QR 85.2 million).
In contrast, net profit and EBITDA decreased against the same
period last year, both by QR 0.2 billion, due primarily to
reduced profitability in the fertiliser and steel segments.
Fertiliser margins were impacted by additional depreciation
following the capitalisation of the QR 8.9 billion Qafco 5
facility in March, 2012, increased price and volume-indexed
feedstock costs, the final installment of the take-or-pay
liability due to Qatar Petroleum and increased finance
charges. In the steel segment, however, margins were affected
by high cost inventories sold during the quarter, the impact
of higher salaries and wages and reduced income from
associates and other income.
Document Reference: Quarterly Trading Statement (Q1, 2012) Release Date: April 19, 2012
Page: 6 of 7
Conclusion
Concluding, Mr. Al-Shaibi said, "The group eagerly awaits the
remainder of 2012 as we build on the successful launch of
Qafco 5 and anticipate the imminent launch of LDPE-3. By the
end of the year, the group expects to launch plant's with a
total of 2.0 million metric ton per annum of urea
capacity
and 240,000 metric tons of LDPE capacity.
QR Billions
20.0
IQ Group Revenue And Net Profit2012 Budget
18.0
16.0
16.5
14.0
14.7
12.0
12.3
10.0
8.0
6.0
4.0
7.3
9.9
5.0
5.5
7.9
4.4
2.0
0.0
2008 2009 2010 2011
1.9
22012
Revenue Net Profit
In closing remarks, H.E. Dr. Al-Sada stated, "I would like to
express my gratitude to H.H. Sheikh Hamad Bin Khalifa
Al-Thani, the Emir of the State of Qatar, for his vision and
leadership, the Board of Directors for its wise counsel, and
to the senior management of the group companies for their
hard work, commitment and dedication."
###
For more information about
this press release, email iq@qp.com.qa or visit
www.iq.com.qa
DISCLAIMER
The companies in which Industries Qatar QSC directly and indirectly owns investments are separate entities. In this press release, "IQ" and "the group" are sometimes used for convenience in reference to Industries Qatar QSC.
This presentation contains forward-looking statements concerning the financial condition, results of operations and businesses of Industries Qatar QSC. 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 a nd 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 infe rred 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 compe tition, (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, as marked on the Cover page.
Industries Qatar QSC, 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. Industries Qatar QSC, its subsidiary, 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. Industries Qatar QSC does not guarantee the accuracy of the historical statements contained herein.
GENERAL NOTES
Industries Qatar's accounting year follows the calendar year. No adjustment has been made for leap years. Where applicable, all values refer to Industries Qatar's share. 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.
DEFINITIONS
Adjusted Free Cash Flow: Cash Flow From Operations - Total CAPEX - Dividends • CAGR: 5-Year Compound Annual Growth Rate (from 2010 actuals)
• 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 • DRI: Direct Reduced Iron • EBITDA: Earnings Before Interest, Tax, Depreciation and Amortisation calculated as (Net Profit + Interest Expense + Depreciation + Amortisation - QR1.2bn government grant received in
2009) • EPS: Earnings per Share (Net Profit / Number of Ordinary Shares outstanding at the year end) • Free Cash Flow: Cash Flow From Operations
- Total CAPEX • HBI: Hot Briquetted Iron • Interest Cover: (Earnings before Interest Expense + Tax) / Interest Expense • LDPE: Low Density Poly Ethylene • LLDPE: Linear Low Density Poly Ethylene • mmBTU: Million British Thermal Units • MT / PA: Metric Tons Per Annum • MTBE: Methyl Tertiary Butyl Ether • Net Debt: Current Debt + Long-Term Debt - Cash & Cash Equivalents • Payout Ratio: Total Cash Dividend / Net Profit x 100 • P/E: Price to Earnings (Closing market capitalisation / Net Profit) • RCF: Funds From Operations - Dividends • ROA: Return On Assets [EBITDA/ (Total Assets - CWIP - PUD) x 100] • ROCE: Return On Capital Employed [Net Profit before Interest & Tax / (Total Assets - Current Liabilities) x 100] • ROE: Return On Equity (Net Profit / Shareholders' Equity x 100) • Utilisation: Production Volume / Rated Capacity x 100 [For new facilities, measure includes first full operational quarter only]
ABOUT IQ
Industries Qatar QSC was incorporated as a Qatari joint stock company on April 19, 2003. The business operations of the company comprise the direct holding of shares in the following subsidiary and joint venture companies: (i) Qatar Steel Company QSC ("QS"), a wholl y-owned subsidiary, engaged in the manufacture and sale of steel billets and reinforcing bars; (ii) Qatar Petrochemical Company Limited QSC ("QAPCO"), a joint venture owned 80% by IQ, engaged in the production and sale of ethylene, low-density polyethylene ("LDPE"), linear low-density polyethylene ("LLDPE") and sulphur; (iii) Qatar Fertiliser Company SAQ ("QAFCO"), a joint venture owned 75% by IQ, engaged in the manufacture and sale o f ammonia and urea; and (iv) Qatar Fuel Additives Company Limited QSC ("QAFAC"), a joint venture owned 50% by IQ, is engaged i n the production and export of methanol and methyl-tertiary-butyl-ether ("MTBE").
The operations of the subsidiary and joint ventures remain independently managed by their respective management teams.
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