Second quarter income reported yesterday by Industries Qatar (IQ) was below expectations, according to National Bank of Kuwait (NBK).
“(It) came in at QR 1,254m, which is significantly below our and the Bloomberg consensus expectations of QR 1,690m and QR 1,712m, respectively,” NBK said.
“The company attributed the sequential decline in earnings to significant planned shutdowns coupled with lower realised prices for certain products,” NBK said. “Notably, urea realised price declined by over 20 per cent quarter over quarter, while methanol price was down by over 30 per cent.”
NBK said the company had earlier announced major shutdowns at its petrochemical and fertiliser units in the second quarter. NBK said the preliminary reported numbers suggest that the shutdowns were more pronounced than communicated earlier.
The petrochemicals segment utilisation averaged 75.5 per cent against 82 per cent in the first quarter and NBK’s expectation it would be 85 per cent. The fertiliser segment utilisation was about 89 per cent in the second quarter, broadly in line with first quarter utilisation of 88 per cent.
The petrochemicals segment contributed about 50 per cent of IQ’s second quarter bottom line compared with a contribution of about 18 per cent and 32 per cent from the fertilisers and steel segments, respectively.
“On a segmental level, the steel segment’s earnings were broadly in line with our expectations,” NBK said. “However, fertilisers disappointed due to a lower urea price, while petrochemicals disappointed primarily due to lower utilisation.”