Hello, and welcome to Industries Qatar conference call. Please note that this call is being recorded. I would now like to hand the call over to our moderator, Bobby Sarkar. Please go ahead.
Thank you, operator. Hi. Hello, everyone. This is Bobby Sarkar, Head of Research at QNB Financial Services. I want to welcome everyone to Industries Qatar's third quarter and nine months 2025 results conference call. On this call from QatarEnergy's Privatized Companies Affairs, we have Abdulla Yaqoob Al-Hay , who is the Manager for Privatized Companies Affairs. We have Rashid Al-Mohannadi, who's the Head of IR and Communications, and we have Ahmad Salleh, who is the Assistant Manager in Financial Operations. We will conduct this conference with management first reviewing the company's results, followed by Q&A. I would now like to turn the call over to Rashid. Rashid, please get us started. Thank you.
Thank you, Bobby. [Non-English content] , good afternoon. Thank you all for joining us. Hope you are doing great. Before we go into IQ's business performance updates, I would like to mention that this call is purely for IQ investors, and no media representatives should be attending this call. Moreover, please note that this call is subject to the disclaimer statement as detailed on slide number two of the IR deck. Kindly note that the MS Teams link is to display the IR deck on screen. In case you want to participate in the Q&A session, you must dial in through the telephone lines as provided in the invitation. We can move on to the call. On Tuesday, 28th of October, IQ published its financial results for the nine-month period ended 30th of September 2025.
Today in this call, we'll go through these results and provide you with updates on key financial and operational highlights. Today in this call, along with me, I have Mr. Abdulla Yaqoob Al-Hay , Manager for Privatized Companies Affairs, and Mr. Ahmad Zakri, Assistant Manager for Financial Operation. We have structured our call as follows. At first, I'll provide you with a quick insight on IQ ownership structure, competitive advantages, overall governance structure, and macroeconomic updates. Later, Mr. Ahmad will provide you with an update on the company financial performance, then later I'll guide you through the rest of IQ's health performance. Finally, we will open the floor for the Q&A. To start with, as detailed on Slide 5 , IQ ownership structure comprises of QatarEnergy with 51% stake, and the rest is in the free float held by various domestic and international corporate and individuals.
Rating agencies such as S&P affirmed IQ issuer rating at AA- with stable outlook, confirming IQ's strong business and financial position. QatarEnergy, being the main shareholder of IQ, provides most of the head office function through a service level agreement, and the operation of IQ group companies are independently managed by its respective board of directors along with senior management teams. In terms of competitive advantages, as detailed on Slide 8 , the group is well-positioned with several competitive advantages within its domain, strategically, operationally, as well as financially. These strengths include an efficient and well-maintained asset base, a qualified, skilled, and highly trained workforce, a sure supply of feedstock and competitively priced energy sources, lower operating costs, a dedicated marketing team in the form of QatarEnergy Marketing to market the group petrochemical and fertilizer products, and reputable JV partners.
Most importantly, a well-experienced senior management team. As detailed on Slide 10, from competitive position perspective, IQ rank among the top tier companies within the regional downstream space across most of the matrices. In terms of the IQ governance structure, you may refer to slide 47 and Slide 46 of the IR deck, which cover various aspects of IQ code of corporate governance in further details. Let's now begin with a quick look at the macroeconomic environment. The global economy faces persistent headwinds. GDP growth forecasts have been revisited downward due to policy shifts, geopolitical tensions, and structural changes. Central banks are easing rates to support recovery, yet uncertainty remains. Work condition has improved since 2022. The outlook for 2026 is cautious with resilience needed among ongoing economic challenges. Moving on to the petrochemical segment, the sector faces significant challenges from overcapacity, weak demand, and sustainability pressures.
Post-COVID investments have outpaced the consumption, driving operating rate for base chemicals to multi-decade lows. The price margin are incentivizing asset closure and consolidation with the slow demand growth and regional policy shifts. The industrial outlook remains uncertain amid ongoing supply-demand imbalances. Turning to the fertilizer, urea prices remain stable, supported by tight global supply and steady demand driven by rising food needs, arable land expansion, and advanced farming technologies. Seasonal demand and stock depletion added momentum. China export restriction and trade barriers limited availability, while easing feedstock cost offered relief, sustaining pricing despite broader global uncertainty. As for the steel sector, the global steel industry continued to face overcapacity and weak demand pressures by high financing costs and sluggish construction activities.
China real estate downturn is reducing demand while production expansion in other regions Mills in the mature market are closing due to low utilization rates, leaving the overall industry outlook uncertain amongst persistent structural challenges. Now looking at our financial performance, the group reported a net profit of QAR 3.4 billion for the nine-month period ended 30th of September, reflecting a 12% decline compared to the restated figures for the same period last year. However, when excluding the one-off items from last year, such as the reversal of financial guaranteed provision and acquisition-related gains, the decline is marginal, with net earnings nearly comparable year-on-year. This underscores IQ's strong underlying performance and operational resilience.
Notably, the third quarter was the best performing quarter of the year, supported by favorable conditions in fertilizer market and robust operational execution, resulting in QAR 1.4 billion in net earnings for the quarter alone. With that, I will now hand over to Mr. Ahmad Zakri to walk us through the financial and operational updates for the period.
Thank you, Rashid. Good afternoon, everyone, and thank you for attending this earnings call. Let us dive into the financial performance for Industries Qatar. As you can see on Slide 15, Industries Qatar reported a consolidated net profit of QAR 3.4 billion for the nine-month period ended 30th September 2025. This represents a decline of around 12% versus the restated nine months 2024 results. Earnings per share or EPS for the nine months of 2025 was QAR 0.56 versus QAR 0.64 for the same period in 2024. EBITDA for the period is QAR 5 billion with an EBITDA margin of 36%, compared to an EBITDA of the same figure, QAR 5 billion, for the same period of last year, with a reported higher EBITDA margin of 39%.
Looking at revenue, Industries Qatar revenue for the nine months in 2025 increased by 8% to reach QAR 13.7 billion as compared to QAR 12.7 billion reported for the same period in 2024. The improvement in revenue for the current period was due to an overall increase in both average selling prices as well as sales volume. Going through IQ's net earnings for the nine months 2025 versus the same period in 2024, as detailed on Slide 16, the group's financial performance for the nine months period ended 30th September 2025 was largely attributable to the following factors. Firstly, product prices. Blended product prices increased by 6% year-on-year to reach $480 per metric ton, and this contributed around QAR 457 million to the overall net earnings for IQ g roup. Prices have stabilized after peaking in late 2022, with fertilizers showing notable resilience.
This was supported by strong agricultural demand, supply disruptions, export restrictions, as well as policy shifts in key economies. Conversely, downstream product demand remained subdued due to tighter monetary conditions and muted economic forecasts. However, recent months have shown signs of recovery driven by improving macroeconomic fundamentals and regional demand, which offers cautious optimism for the supply-demand balance ahead. The next factor contributing to the improved bottom line is sales volumes, which for the nine months period ended September 2025 has increased by 2% year-on-year, and this contributed QAR 620 million to net earnings. This growth in sales volume was driven by stable demand amid easing macroeconomic challenges and supply bottlenecks alongside increased production.
Despite regional uncertainties and shipment logistics challenges across segments, overall volumes showed positive momentum. This performance clearly reflects the group's ability to navigate market complexities as well as optimize output, reinforcing its operational resilience and positioning for continued recovery in key markets. Moving on to the next factor that contributed to the net profit, operating costs. In line with increased production volumes as well as higher sales volumes and improved selling prices, operating costs for the nine months in 2025 increased compared to the same period of last year. This increase had negatively impacted net earnings by QAR 785 million, primarily due to higher variable costs linked to volume growth, price-driven feedstock and raw material expenses, unfavorable inventory movements, and general cost inflation. Moving on to the next factor, which is on other income.
The group's financial performance for the period was also impacted due to lower other income as a result of a lower interest rate environment and the absence of one-off gain on reversal of provision for financial guarantee and absence of fair value gains recognized on acquisition of a subsidiary in last year. Moving on. Looking at the group's results for the third quarter of 2025, this has indeed been an excellent quarter, with net earnings of QAR 1.4 billion, which is a whopping 47% increase compared to the previous second quarter. This was mainly driven by higher fertilizer prices and supported to a lesser extent by improved steel prices. Fertilizer prices strengthened on the back of renewed demand, export restrictions, and bans imposed on certain producers. Meanwhile, steel prices benefited from increased demand for intermediary products and low carbon steel solutions.
Moving on to the financial position of the group. As detailed on Slide 15, the group's financial position remains robust, with proportionately accounted cash and bank balances of QAR 9.5 billion as of 30th September 2025. This balance is already after payment of dividends relating to the second half of FY 2024, as well as the first half of FY 2025, amounting to QAR 2.6 billion and QAR 1.6 billion respectively, which gives a total of QAR 4.2 billion of dividend payments. Currently, the group has no long-term debt obligations. The group's reported total assets and total group equity reached QAR 41 billion and QAR 37.1 billion respectively as of 30th September 2025. The group also generated positive operating cash flows of around QAR 3.4 billion, as well as free cash flows of around QAR 1.9 billion.
Now we can move on to the segment-by-segment review, which I will hand over to Rashid. Over to you.
Thank you, Ahmad. To start with, the Petrochemicals segment, as detailed in Slide 24. The Petrochemicals segment reported a net profit of QAR 714 million for the nine-month period ended on 2025, representing a 39% decline compared to the same period of last year. This decrease was mainly driven by the lower revenue and a reduction in operating margin influenced by an increase in operating cost. Revenue declined due to a 6% drop in sales volume and a 3% decrease in average selling price. Both were impacted by a mix of internal and external challenges. Selling prices eased compared to last year, primarily due to a macroeconomic headwind, including weaker demand, oversupply from cautious buying behaviors, geopolitical tensions, and crude price volatility. Additionally, the volume were affected by unplanned shutdowns within both polyethylene and fuel additive segments.
On quarter-on-quarter basis, net earnings marginally increased by 1%, supported by a marginal increase in revenue. Revenue growth was driven by higher sales volume by 3%, although this was largely offset by shorter prices by 2%. Operating cost rose modestly in line with increased volume, resulting in overall marginal net profit improvement. Operationally, the segment delivered a stronger result during the quarter with improved plant availability, reliability, and utilization. Moving on to the fertilizer segment, as shown on Slide 30. The fertilizer segment delivered a robust net profit of approximately QAR 2.1 billion for the nine-month period of 2025, marking a significant 38% increase compared to the same period of last year.
This remarkable increase was primarily driven by a significant increase in average selling price by 23%, with urea continuing to demonstrate price resilience, supported by growing food demand, expansion of arable land, improved farmer accessibility, tightened supply from key export markets, and uncertainty around tenders in major consuming regions. The sales volume declined marginally by 8%, mainly due to lower production and evolving market conditions. Revenue increased year-on-year by 13%, largely on the back of higher average selling price, while operating cost rose only slightly, supported by the segment's ongoing focus on cost optimization across all facets of operations. This resulted in a stronger improvement in operating profit and margins. Quarter-on-quarter, the segment delivered a strong performance, more than doubling its net profit with 101% increase.
This was primarily driven by expansion on operating margin, supported by a 24% rise in revenue and a reduction in operating cost, mainly due to lower utility expenses. Revenue growth was underpinned by a 17% increase in selling price and a 6% rise in sales volume. The volume uplift was driven by improved production and healthier market dynamics. While price gains reflected a tighter global supply, renewed demand for major agricultural markets, and export restriction from key producers. We'll move on to the last segment, the steel segment. As detailed on Slide 36, the steel segment reported a net profit of QAR 345 million for the nine-month period ended 30th of September 2025, reflecting a 21% decline compared to last year. This decline was primarily due to an absence of one-off gains recorded last year from the reversal of financial guaranteed provision related to an associate.
Excluding this non-recurring item, the segment net profit would have been approximately 18% higher year-on-year, underscoring a stronger operational performance driven by a higher production and improved sales volume. Segmental revenue increased by 25% year-on-year, supported by a 45% rise in sales volume due to expanded production capacity and market reach. Selling price declined by 14%, impacted by global oversupply, softer domestic and international demand, and changes in the sales mix. Rebar demand remained subdued amid a challenging macroeconomic environment and tight monetary conditions. The signs of recovery began to emerge in the second half of the year, particularly in China. Quarter-on-quarter, segmented profit declined by 46% compared to the previous quarter, mainly due to lower gross margin and a reduced share of results from associates.
Revenue recorded a marginal increase of 1% as a 5% rise in average selling price was largely offset by a 4% drop in sales volume, despite the higher production. Operating costs were slightly in line with increased production. Thank you for your attention. That concludes our presentation. We will now open the floor for the Q&A session.
Thank you. If you would like to ask a question, please press star and the number one on your telephone keypad. Again, that is star and the number one on your telephone keypad. Our first question comes from the line of Jonathan Chung from Morgan Stanley. Please go ahead.
Hello. Hi, thank you for the presentation. I have a few questions, please. First, please, on your petrochemical segment, it looks like your methanol price QoQ has increased while the other chemical product has declined. Can you just talk about the drivers for that increase in methanol prices, please? Second question is on your fertilizers. Again, stronger prices QoQ. Where do you see the average selling price today versus 3Q average? My last question is around your unplanned turnaround, unplanned shutdown in the fuel additives business. Could you quantify the impact of the shutdown, please? How many days they were shut down, and how much did that impact was that? Thank you.
Just to answer you on the petrochemical, I think when you refer to the slide of the prices we realize, essentially the whole petrochemical industry has been on a downward trend. However, the prices we are realizing is fairly stable QoQ, and that's due to our product mix, due to our outreach to the customers, and the end users of the product. I think methanol has slightly increased, and we've been seeing ups and downs in the prices in the recent few quarters, and we don't see a particular reason why the price has slightly increased this quarter. It could be due to reviving of certain demand in certain region, but the uplift is not significant. The price used to be $235 per ton in the previous quarter, and this quarter we're recording, I think, $7 increase. I think your second question with regard to the fertilizer segment.
This quarter specifically, we've realized a higher price, and that's due to the reason we mentioned. We've seen that there is an increased kind of demand or steady demand coming from the market. While at the other end, we have a shortage of supply in the market. Also, the uncertainty around the planned shutdown or unplanned shutdown for other competitors has played a role as well. These factors have supported us in third quarter for the prices to rise along with the market demand. Going forward, how the price will evolve will depend on the seasonality of the farmers, whether the farming season is more favorable in term of the economics, whether the global GDP level sustained to be higher toward the year end, whereby there is an increase in consumption, increase in all global economical KPIs. Those will determine the prices trajectory in the fourth quarter.
Essentially, I think that the lowering of the Fed's rate will provide a lower-level kind of assurance on all commodity prices that hopefully will stimulate buyers' appetite to buy more products. We are hopeful that we are ready for the next upcoming quarter, and we are well-positioned for that. I think your third question, if you can repeat it, please.
My third question is around the unplanned shutdown, the fuel additives business. Could you quantify the impact and the number of days that it was shut down?
Right. I think, first of all, with regards to any unplanned shutdowns, we generally don't have a look forward forecast for unplanned shutdowns, hence why they are unplanned. In terms of shutdowns, essentially, we have a robust overall annual operating plan for all our assets across all segments. These are scheduled. There will be scheduled downtimes to allow for regular maintenance, overhaul, replacement of critical equipment. These are generally done at the appropriate time during each quarter, in tandem with production planning as well as planning for sales, optimization of sales mix to cater for the market demand. Generally, when we talk about shutdowns in the next quarter, for us, for Industries Qatar, we don't expect any major shocks or major unexpected impact coming from this.
Any shutdowns that will happen in the next quarter four, will be part and parcel of our normal business operations in running the plant. We don't expect any unexpected or any significant material adverse impact to our numbers in the coming quarters coming from shutdowns. These are all part of our normal plant operations, and these are necessary in order to keep our petrochemical plant and assets running at optimum capacity, optimum reliability. I will take this forum to also emphasize that our production numbers, if you look at our production numbers for the first nine months, they are showing very good numbers. It's higher year-on-year. If you look at our overall utilization, reliability numbers are showing really good numbers as well. Overall, we are quite comfortable with the way our plants have been operating.
Again, normal plant turnaround activities, plant repairs, and maintenance, which include shutdown, these are all being done in the best way possible, in line with our overall annual operating plan. We manage our assets well, we manage our assets efficiently, and we deliver the right results to ensure that we continue to generate value for all our shareholders. I hope that answers your question.
Okay. Thank you.
Thank you. Our next question comes from the line of Sashank Lanka from Bank of America. The line's open.
Yes. Thank you very much for the presentation and congrats on the strong set of Q3 results. I have a couple of questions. The first one is on the Blue Ammonia plant. Can you give us the latest update there? I think the last update was its scheduled to start up in the second half next year. Any further updates on that would be helpful. The second one is just on your fertilizer segment, you had the highest margins since, I think, 2021, almost four years, even higher than 2022, when we saw record high fertilizer prices. Is this mainly because your urea prices were indexed to the year-to-date prices? Sorry, your urea prices were based on Q3 average and feedstock prices were indexed to the year-to-date average. Should we expect some normalization in Q4 given urea prices have corrected a bit from Q3?
Thank you.
I'll take the second question about the fertilizer, the first question, Ahmad will take care of. I think the second question with regard to the EBITDA margins. I think the scenario that happened four years ago repeated itself this quarter. We've seen a swift increase in selling price for third quarter, that swift increase in selling price would cascade to a lower operating cost in our end. Hence, we will see that increase in the EBITDA margin. Going forward, how the EBITDA margin will evolve will depend basically on our operation going forward and how the EBITDA margin will evolve. It will essentially depend on the price. If the price goes up, we'll expect a healthier margin. If the price goes down, we'll expect a crunch in margin.
It will all depend on the price we realize on fourth quarter, which will depend on the market dynamics. I think the first question you asked about the Blue Ammonia. With regard to the Blue Ammonia, basically, it's going as per the plan. The construction is going on the site. We will update the market closer to the completion of the project.
Okay. Thank you very much.
Thank you. There are no further questions. I will now turn the call back over to our moderator, Bobby, for closing remarks.
Okay, thank you. If there are no further questions, I would like to thank IQ management for taking the time to go over the presentation and answer our questions. We will pick this up again next quarter. Thanks, everyone.
Thank you.
Thanks, everyone.
The meeting has now concluded. Thank you all for joining. You may now disconnect.