DUBAI, (Reuters) – Industries Qatar, the Gulf’s second-largest chemical maker by market value, posted its fifth consecutive record quarterly profit on higher prices, beating analysts forecasts and pushing its stock up 1.5 percent.
The company’s net income in the three months to June 30 more than doubled to about 2.68 billion riyals ($736.7 million) from 1.15 billion a year ago, according to Reuters calculations based on first-half data released by Industries Qatar on Sunday.
“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 Eats Financial Brokerage.
Two analysts polled by Reuters expected Industries Qatar to report second quarter profit of 1.8 billion riyals and 2.21 billion riyals.
Industries Qatar 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 state-controlled Saudi Basic Industries Corp (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 7.54 billion riyals ($2.0 billion), up 16.5 percent from a year ago.
STEEL OUTPUT HIKE
Jaouni said state-controlled Industries Qatar, which also produces steel and fertiliser, may have benefited from increased capacity from its steel unit Qatar Steel Co (QASCO).
QASCO, 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 Co 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 percent to 19.7 million tonnes this year, according to the Gulf Organization for Industrial Consulting.
“Part of the increase in profit is more capacity at some of its steel lines” Jaouni said.
In a regulatory filing on the bourse website, Qatar’s largest company said net profit rose to 4.6 billion in the first half of 2008.
It did not give a breakdown of its financials and Mohammed al-Shirrawi, director of finance at the firm could not immediately be reached for comment.