GulfBase Live Support
01/05/2014 07:13 AST
The industrials sector witnessed considerable slowdown in their earnings in the first quarter (Q1) of this year, even as stock market investors pin hope on the sector’s prospects in view of Qatar’s increasing reliance on non-hydrocarbon segments.
The listed companies under the industrials segment saw their cumulative net profit plunge 22% to QR2.54bn in the first three months of this year against a stupendous 24% growth experienced in the corresponding quarter of 2013.
The industrials group (excluding the newly listed Mesaieed Petrochemical Holding Company) has reported a cumulative net profit of QR2.54bn compared to QR3.24bn in the previous year period.
The industrials group has seen 17.88% expansion in its index, thus outperforming the Qatar Stock Exchange’s main index by 5.74%.
Three among them, notably Industries Qatar (IQ) reported slippages in net profits, while five witnessed improvement.
The overall decline in the sectoral net profitability was mainly resulting from a 38% plunge in earnings from the market heavyweight IQ - a holding company for Qatar Petrochemicals, Qatar Fertiliser, Qatar Steel and Qatar Fuel Additives - due to planned shutdown of its subsidiaries. In the year-ago period, IQ had reported 34% jump in net profit.
There might be some islands of prosperity within the sector, but overall it would depend on the performance of the underlying IQ, market sources said.
Considering the shutdowns planned for the second quarter, the net profitability trend is likely to be muted for the remainder of the year, which will have its reflection on the overall earnings prospects of the sector, unless there is a marked increase in product prices, sources said.
Qatar Industrial Manufacturing Company saw its net profit jump 14% in Q1 2014 against a 22% fall in the previous year period; Qatar National Cement Company witnessed a 10% rise compared to a less than 1% growth in the year ago period, and Qatar Electricity and Water Company reported 49% growth against a 31% decline in Q1 2013.
Mannai Corp saw a robust 73% expansion in net profit in Q1 2014 compared to 15% in the previous year period and Aamal Company 46% against 8%.
Apart from IQ, Qatari Investors Group witnessed its net profit rise 10% in January-March this year compared to a 55% expansion in the year-ago period and Gulf International Services saw a 39% jump against 48% in the same period of previous year.
Sources are of the view that the industrial sector ought to benefit from an overall expanding growth in Qatar but unlike other sectors, the benefits of which will take some to trickle down. Their optimism stems from the increased contribution of non-hydrocarbon segments to Qatar’s gross domestic product.
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