Industries Qatar (IQ), owner of the country’s leading manufacturing establishments including those related to chemicals, fertilisers and steel, posted its fifth consecutive record quarterly profit on higher prices.
The company’s net income in the three months to June 30 more than doubled to about QR2.68 billion ($736.7 million) from QR1.15 billion a year ago, according to Reuters’ calculations based on first-half data released by Industries Qatar.
“It’s better than all expectations and definitely due to high oil prices ... it has been the same with all petrochemical firms such as Saudi Basic Industries Corp (Sabic), which had a record in Q2,” says Samer Al-Jaouni, general manager at Middle East Financial Brokerage.
Two analysts polled by Reuters expected IQ to report second-quarter profit of QR1.8 billion and QR2.21 billion.
IQ has a market value of $27.5 billion. Sabic is the world’s largest chemicals firm valued at about $98 billion.
Oil prices, to which chemical prices are linked, have surged to above $115 per barrel this year, compared with less than $65 per barrel a year ago but have slid since hitting a record high of over $147 a barrel in July.
Many global chemical producers rely for feedstock on naphtha — whose price is also linked to oil — but Gulf rivals such as Sabic benefit from fixed and relatively low prices for ethane gas. Qatar is the world’s third-largest holder of natural gas reserves.
Sabic’s second quarter profit was around $2.0 billion, up 16.5 per cent from a year ago.
Al-Jaouni said state-controlled IQ, which also produces steel and fertiliser, may have benefited from increased capacity from its steel unit Qatar Steel Co.
Qatar Steel, which aims to almost double production by 2012, contributes to more than a third of sales for its parent company, according to previous financial statements. Qatar Steel produced about 1.1 million tonnes of steel billets last year.
Demand for iron and steel in the world’s biggest oil-exporting region — where more than $2 trillion of infrastructure projects have been announced or are under construction — could rise than 30 per cent to 19.7 million tonnes this year, according to Doha-based Gulf Organisation for Industrial Consulting.
“Part of the increase in profit is more capacity at some of its steel lines” Al-Jaouni said.
In a regulatory filing on the bourse website, Qatar’s largest company said net profit rose to QR4.6 billion in the first half of 2008.
It did not give a breakdown of its financials.
Industries Qatar’s main companies are Qapco, Qafco, Qatar Steel and Qafac. It is currently involved in projects worth QR21.2 billion of which the cost to itself will be QR14.4 billion.
The major projects include the Qatofin-LLDPE plant, Qafco 5, Qapco LDPE 3 and Qatar Steel’s Guelb el Arouj iron ore project.
All the projects it is involved with will be completed by the end of 2011.