April 19 (Bloomberg) -- Industries Qatar, the Persian Gulf country’s second-biggest company by market value, reported a 9.5 percent drop in first-quarter profit amid higher costs.
Net income fell to 1.9 billion riyals from 2.1 billion riyals a year earlier, the company said in an e-mailed statement to the Qatar Exchange. The average estimate of five analysts was for a profit of 1.75 billion riyals. Revenue rose 9 percent to 4.36 billion riyals, according to the statement.
The results beat analyst estimates “mainly due to the surge in steel revenues,” Ahmed Shams El Din, Cairo-based director of equity research at EFG-Hermes Holding SAE, said in an e-mail. The company also showed “better than expected urea volumes as the impact of the maintenance shutdown on the quarterly performance was more muted than we thought.”
The company, which owns units that make petrochemicals, fertilizer, steel and fuel additives, said costs rose 23 percent to 2.2 billion riyals. Saudi Basic Industries Corp., the world’s biggest petrochemical maker, reported April 17 that its net income dropped 5 percent amid higher feedstock costs.
Industries Qatar is utilizing the world’s third-largest natural gas reserves to increase output. The new Qafco 5 fertilizer plant rose to 86 percent of its capacity by the end of the quarter and will reach “normal utilization levels” this quarter, the company said. A new low-density polyethylene petrochemical plant will start operation this quarter.
The company experienced “reduced profitability in the fertilizer and steel segments,” Industries Qatar said in an e-mailed press release. “Fertilizer margins were impacted by additional depreciation following the capitalization of the 8.9 billion riyal Qafco 5 facility in March” and increased feedstock costs.
The shares dropped 0.9 percent to close at 139.8 riyals today before the results were announced. The stock has gained 5.1 percent this year compared with a 1.6 percent decline for the benchmark QE Index.
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