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Industries Qatar may post $495m growth in quarterly profits

DUBAI - Industries Qatar, the largest publicly traded company in the Arabian Gulf emirate, may report a 56 per cent gain in profit on rising prices for fertiliser and steel and access to discounted natural-gas supplies.

Industries Qatar, the Middle East's second-largest chemical maker after Saudi Basic Industries Corporation, may report net income of 1.8 billion riyals ($495 million) when it releases results on August 10, according to an estimate from EFG-Hermes Holding SAE.

“If you look at all the products that Industries Qatar manufactures, the prices have gone up,” Amrith Mukkamala, senior research analyst at Kuwait Financial Centre SAK, Markaz, said in a telephone interview on August 6.

“We see production increases across all of its segments.” He didn't provide second-quarter earnings estimates.

Industries Qatar will invest as much as $3.9 billion through 2009 to boost steel, fertiliser and petrochemicals output through its four main units, including Qatar Steel Company and Qatar Fertiliser Company. It aims to meet rising demand for construction materials as Qatar's economy expands 12.7 per cent this year, according to a Bloomberg economists' survey in July.

Fixed prices: Like Sabic, the world's largest chemical maker by market value, Industries Qatar benefits from discounted natural-gas supplies from the government. It pays $1.25 per million British thermal units for natural gas, compared with current spot Henry Hub natural gas prices of $8.70, according to estimates from Dubai-based Shuaa Capital PSC.

“Industries Qatar's cost base for its gas-based products is fixed, and is not impacted by rising oil prices,” Laurent Gally, an analyst at Shuaa Capital in Dubai, said in a telephone interview.

“This will enable the company in tough times in the industry to acquire assets and expand the way it wants to.”

Qatar Steel will more than double steel bar output, according to a May 2008 report from Markaz. Qatar Fertilizer in May signed an agreement with PetroVietnam Fertilizer & Chemical Joint-Stock Company to export urea into the Southeast Asian country.

Inflation: Industries Qatar may see net income growth slow from the 115 per cent reported in the first quarter because of government price intervention aiming to ease inflation and from an increase in the cost of building materials, Markaz said in a report.

Qatar Steel will keep prices unchanged in the third quarter from the second, in a bid to help the government curb rising inflation, which at a record 14.8 per cent in the first quarter is the highest among the six Gulf Cooperation Council states.

“You will not see the same growth as in the first quarter, but the growth rates will still be robust,” Mukkamala said.

Markets last week: The seven Arabian Gulf benchmarks tracked by Bloomberg declined last week. Oman's Muscat Securities Market 30 Index dropped the most, losing 4.4 per cent. Saudi Arabia's Tadawul All-Share Index fell 3.3 per cent, while the Dubai Financial Market General Index retreated 2.9 per cent.

Union Properties, the Dubai-based real-estate developer that's building F1-themed parks, slid 12 per cent since Morgan Stanley initiated coverage with an “underweight” recommendation on August 5. The second-largest US securities firm gave the stock a price estimate of Dh5.7.

Shuaa Capital PSC dropped 16 per cent last week. The United Arab Emirate's biggest investment bank said on August 5 first-quarter net income fell 10 per cent to Dh67.1 million ($18.3 million) as investment income declined and staff numbers almost doubled.