Thank you for standing by, welcome to the Industries Qatar results call. I would like to advise all participants this call is being recorded. I'd now like to welcome Bobby Sarkar from QNB Financial Services to begin the conference. Bobby, over to you.
Thank you, operator. Hello, everyone. This is Bobby Sarkar, Head of Research at QNB Financial Services. I want to welcome everyone to Industries Qatar's second quarter and first half 2024 results conference call. On this call from QatarEnergy's Privatized Affairs Group, we have Abdulla Al-Hay, who is the Manager for Privatized Companies Affairs; Rashid Al-Mohannadi, who is the Head of IR and Communications; and Saffan Mohammed, who is the Senior Financial Management Analyst. As usual, we will conduct this conference with management first reviewing the company's results, followed by a Q&A. I would like to now turn the call over to Rashid. Rashid, please go ahead.
Thank you, Bobby. Good afternoon, thank you all for joining us. Hope you are doing great. Before we go into IQ business and performance updates, I would like to mention that this call is purely for IQ investors, no media representative should be attending this call. Moreover, please note this call is subject to a disclaimer statement as detailed on slide number two of the IR deck. Now, we can move on to the call. On Monday, 12th of August, IQ published its financial results for the six-month period ended 30th of June 2024. Today in this call, we'll go through these results and provide you an update on key financial and operational highlights. 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 on the phone number provided as part of the invitation. Today on this call, along with me, I have Mr. Abdulla Al-Hay, Manager for Privatized Company Affairs, and Mr. Saffan Mohammed, Senior Financial Management Analyst. Let me start the meeting by sharing with you that first time IQ board of director decided to distribute an interim dividend. This is a clear evidence of IQ unwavering commitment to its shareholder in particular, and to the capital markets in general. This decision was made while prudent care was taken to maintain adequate liquidity for CapEx requirement, debt obligation, and any unexpected adversity and/or regulatory requirement. We have structured our call as follow. At first, I'll provide you with a quick insight on IQ ownership structure, competitive advantages, and overall governance structure.
Secondly, Abdulla will brief you on IQ key macroeconomic updates and development aspects. Later, Saffan will provide you with an update on financial and performance matrices, then he will provide you with segmental updates. Finally, we will open the floor for the Q&A. To start with, as detailed on slide number five, IQ ownership structure comprises of QatarEnergy with 51% stake, and the rest in the free float held by various domestic and international corporates and individuals. IQ is a credit-rated entity by S&P with AA- and Moody's with Aa3 credit rating, both stable with a stable outlook. These ratings are further affirmed by S&P recently. QatarEnergy, being the main shareholder of IQ, provides most of the head office function through a service level agreement.
Operation of IQ group companies are independently managed by its respective board of directors along with senior management teams. In terms of the competitive advantages, as detailed on slide number eight, 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 [inaudible], a qualified, skilled, and highly- trained workforce, a sure supply of feedstock and competitively- priced energy sources, lower operating costs, a dedicated team in form of Muntajat to market the group petrochemical and fertilizer products, and reputable joint venture partners. Most importantly, a well-experienced senior management team. As detailed on slide number 10, from competitive position and perspective, IQ ranks among the top-tier companies within the region and downstream space across most of the matrices.
In terms of the IQ governance structure, you may refer to slide 51 and 52 of the IR deck which cover various aspects of IQ code of corporate governance in further detail. I will now hand over to Abdulla to cover the macro aspects, including macroeconomic, operation, and year-on-year performance.
Thank you, Rashid. Good afternoon, and thank you all for joining us. We started with the interim dividends for the first half of 2024. Following the latest regulatory updates towards the end of the last year and mid of 2024, and based on QatarEnergy announcements to support the initiatives of distributing interim dividends by its listed companies being a key step in supporting efforts and initiatives that aim to strengthen the national economy through developing Qatar capital market following the best regional and international practices. Following the announcement of QatarEnergy, IQ has further assessed the financial and legal capacity to distribute semi-annual dividends. Based on this assessment, the board of directors on August 12th, 2024, decided to distribute cash dividend totaling of QAR 1.9 billion for the period ended June 30th, 2024.
This distribution corresponds to a payout ratio of 80% of the net profit for the current period, representing QAR 0.31 per share applicable to the shareholder at the closing trading of August 20th, 2024. This achievement signifies strategic initiatives to maximize shareholder value while maintaining a strong and resilient financial position to protect the company against any further market fluctuations. Moving to the macroeconomic environment analysis. While the macroeconomic environment remains still challenging due to the high interest rates, an inflationary environment and macroeconomic context showed signs of improvement in early 2024. This coupled with stabilization and growth aided global demand. However, geopolitical conflicts and supply chain disruptions continue to add some level of uncertainty to the macroeconomic landscape.
The petrochemical sector faced demand and supply challenges on both consumer and producer fronts, weakened consumer demand, coupled with relatively swinging crude price and structural capacity additions, has somewhat eased supply during the year. The recent policy stimulus by the Chinese governments provide some of the support to stabilize the demand and supply equilibrium within the segment. In the fertilizer segment, the macroeconomic environment has stabilized after reaching its peaks in 2022. The restoration of European production has significantly improved supply conditions and normalized the supply, and has to lead to relatively stable nitrogen fertilizer prices. This should support the industry and provide long-term stability to the fertilizer market.
Throughout 2023 and early part of 2024, the macroeconomic outlook for the steel segment remained somewhat challenging, with a muted demand in the property sector in larger economies like China, together with weaker consumer demand amid hawkish monetary policy, failing consumer confidence, limited domestic demand, coupled with a slowdown in the global construction activities. The sharp decline in raw material prices such as iron ore, scrap material, further impacted steel prices. Recent policies initiatives by the larger economies like China, whereby the Chinese government has taken a series of initiatives to boost the economy, are expected to benefit the construction segment and thereby the steel sector in general. Nevertheless, t he steel prices have remained relatively unchanged from the previous quarter, as these reforms are yet to fully reflected in the macroeconomic system. I will now hand over to Saffan to cover the financial and operation update for the period.
Thank you, Yaqoob. Good afternoon, everyone, and thank you for attending the earnings call. Diving into the financial performance as reported on slide number 15, group reported a consolidated net profit of QAR 2.3 billion for the six months period ended 30th June 2024, with a moderate improvement of 12% versus the same period of last year. Earnings per share for half one 2024 was QAR 0.39 versus QAR 0.35 half one 2023. EBITDA for the period was QAR 3.4 billion, with an EBITDA margin of 31%, compared to an EBITDA of QAR 3.1 billion for the same period of last year, with a reported EBITDA margin of 35%. Group revenue for half one 2024 was moderately declined by 7% to reach QAR 8.3 billion compared to QAR 8.9 billion for half one 2023. Reduction in revenue for this period was due to an overall decline in selling prices and sales volume.
IQ's net earnings for half one versus half one 2023, as detailed in slide 16, was largely attributed to the following key factors. Product prices. Blended average product prices marginally declined by 5% versus half one 2023, reaching to $448 per metric ton. This contributed negatively to the group's net earnings by QAR 407 million compared to last year's period. Despite prices being marginally down in 2024, it's worth noting that product prices have contributed to stabilize over the previous few quarters after peaking during the second half of 2022. This price stability was supported by supply challenges from regional geopolitical uncertainty, plant turnarounds, export restriction in some larger economies, and production shortfalls in some of the geographies. On the other hand, demand for downstream products was impacted by muted economic forecasts in large economies, aggressive monetary policies, and limited domestic and regional demand.
At the same time, a positive trend was noted in recent months on the backdrop of improved macroeconomic fundamentals and favorable policy changes. Sales volumes. Sales volume for half one decreased marginally by 2% versus half one 2023, primarily driven by weaker demand due to ongoing macroeconomic challenges and supply bottlenecks amid regional uncertainties and the timing of shipments within some of the segments. This was partially offset by a slight improvement in production, which was increased by 1% versus the same period of last year. Operating expenditures. Operating costs for half one 2024 were decreased by 11% compared to half one of 2023. The decrease was primarily due to lower variable costs, driven by price-linked feedstock costs and favorable inventory movement, partially offset by general cost inflation. Other income.
Group financial performance for the current period was also aided by one-off other income related to reversal of a bank guarantee provided by group subsidiary, Qatar Steel, to its associate, Solb Steel. Part of the bank guarantee was released by the lenders, and Qatar Steel's share of this bank guarantee was QAR 143 million. Comparing IQ's net earnings for Q2 2022 versus Q1 2022 as detailed on the same slide. The current quarter saw IQ's net earnings were declined by 18% versus Q1 2022 to reach QAR 1.1 billion. This reduction was primarily due to lower gross margin in the fertilizer segment, which was owed due to higher operating costs, mainly within the cost of goods sold. This reduction, however, was partially offset by improved one-off other income within the steel segment due to the reversal of previously provided bank guarantee, as explained previously.
On the other hand, petrochemical segment's performance marginally improved compared to the previous quarter on the backdrop of improved margins. Selling prices remained relatively unchanged versus the previous quarter within all segments except the fertilizer segment. This was against the backdrop of an identical but more stable macroeconomic environment prevalent during the first quarter of 2024. Financial positions. As detailed on slide 15, the group's financial position remained robust, with proportionately accounted cash balance reaching QAR 12.4 billion as of 30th June 2024, after accounting for dividend payout relating to the financial year 2023 amounting to QAR 4.7 billion. Currently, group does not have any long-term financial debt obligations. The group's reported total assets and total equity reached QAR 41.5 billion and QAR 38.4 billion, respectively, as of 30th June 2024.
The group generated positive operating cash flow of QAR 1.6 billion with a free cash flow of QAR 0.7 billion during the first six months of 2024. With respect to the segmental performance, as detailed on slide number 24, the petrochemical segment reported a net profit of QAR 721 million, declined by 13% versus half one of 2023. This decrease was mainly linked to decline in segmental revenue and margins during the current period. As detailed on slide number 23, average selling prices were down by 5% due to prevailing macroeconomic conditions during the year. On the other hand, sales volume remains relatively unchanged despite lower production volumes amid lower plant availability. On a quarter-on-quarter basis, segment's net earnings improved due to improved gross margins on the backdrop of a decline in operating costs.
Operational performance within the segment remained relatively robust, although there were some outages in one of the facilities within the polyethylene segment. Fertilizers. As detailed on slide 30, fertilizer segment reported a net profit of approximately QAR 1 billion for half one 2024, with a notable improvement of 39% versus the same period of last year. This noteworthy rise in net profits was primarily driven by improved operating costs, which declined by 13% versus last year. Improvement in operating costs were mainly associated with a reduction in variable costs owing to lower feedstock cost and favorable inventory changes. Additionally, sales volumes were marginally improved due to improved production volumes compared to the same period of last year. Segment's revenue decreased by 2% in half one compared to the same period in last year due to lower selling prices, as detailed on slide 29, which were partially offset by improved sales volumes.
Selling prices declined marginally by 4% versus half one 2023 as nitrogen fertilizer prices returned to their long-term average after peaking in the first half of 2022. On a quarter-on-quarter basis, segmental revenue decreased by 5% versus the previous quarter, owing to lower average selling prices, partially offset by higher sales volume. Selling prices declined by 17%, while the sales volumes improved by 14%, resulting in overall revenue for Q2 2024 declined by 5% versus the previous quarter. Segment's net profit decreased by 43%, mainly due to lower gross margin on account of reduced revenues and higher operating costs. Moving on to steel segment. As detailed on slide number 36, the steel segment reported a net profit of QAR 359 million, which increased by 29% compared to last year.
Improved segmental earnings were mainly driven by recognition of a one-off other income related to the reversal of a bank guarantee amounting to QAR 143 million previously provided to one of its associates, which was explained previously. Segmental revenue declined by 18% due to lower prices and volumes combined. Steel prices, as detailed on slide 35, on average decreased by 5% due to higher supply in the market and softening domestic and international demand. Simultaneously, sales volumes were down by 15% due to challenging demand conditions. Construction demand continued to remain difficult due to prevailing macroeconomic environment, with most central banks continue to persist with hawkish monetary policies. Although conditions started to improve during Q2 2024 as a result of global recovery, particularly in China, a larger contributor to the construction economy has taken a series of measures to reignite its domestic construction sector.
On a quarter-on-quarter basis, segmental profits improved by 29% versus 1Q 2024, mainly because of enhanced other income as the segment recognized a one-off non-recurring income in Q2 2024 relating to reversal of the bank guarantee, as discussed previously. Segment's revenue declined moderately by 14%, mainly due to lower sales volumes, which decreased by 16% on account of muted domestic and global demand. Production declined by 24%, primarily due to lower production on account of planned maintenance during the second quarter of 2024. That concludes the segmental discussion, I will now hand over to Rashid to further conclude the presentation.
Thank you, Saffan. I would like to thank the management team for the presentation. Now, we can open the floor for the Q&A.
Thank you. I would like to invite any participants who wish to ask a question to please press star one on their telephone keypad to raise your hand and join the queue. Again, to ask a question, please press star one. Your first question comes from the line of Ricardo Rezende from Morgan Stanley. Please go ahead.
Hello. Good afternoon, thanks for taking my question. My first question is on this reversion, QAR 143 million that you just mentioned. Is there anything that should still be impacting the third quarter, or is that specifically on the second quarter? The second question, it's on when an unexpected shutdown in one of the polyethylene plants or LDPE, if I'm not mistaken. Could you please just elaborate a little bit more on that, and has that been fixed? How much extra cost did you incur because of that turnaround? Thank you.
This LDPE plant shutdown was a planned shutdown, so the cost information, basically, these are all capitalized. We don't have exact expenditure with respect to the shutdown. Those are all capitalized and it will be added to their PPE. That was a planned shutdown, and within the polyethylene segment, there are no major shutdown going ahead within the next rest of the year. There'll be a couple of few small shutdowns every month. Very minimal shutdowns. What was your other question?
On the reversion. On the provision and reversion.
For the Solb Steel, the QAR 143 million, our share of that was currently agreed. Further discussions are going on. Still nothing has been agreed.
Thank you very much.
Your next question comes from the line of Prateek Bhatnagar from HSBC. Please go ahead.
Hi. Thanks for the presentation and for taking my question. I have two. The first one is on QAFAC. Where are we with the acquisition of the remaining stake, 50%? Could you give some light there? The second question is on QAFCO. You said that the fertilizer OpEx was benefited by beneficial inventory you had. How much can you quantify? What was the benefit which incurred to you because of the beneficial inventory? Will there be some benefit in Q3 as well and Q4 for that? Thank you.
Prateek, thank you for your question. Much appreciate your participation. I believe we had the same kind of question during the, I would say, year-end of 2023, where we have also had the same answer that whenever this stake of QAFAC, 50% are offered for sale for IQ, we will be interested to enter into a negotiation with the owner of that stake. However, this stake has still not been offered for IQ and once it will be offered, we will be announcing the progress of that negotiation to the shareholders. Second point with regard to the QAFCO's favorable inventory movement, maybe Saffan can elaborate more.
If you look at the end of 2023, or end of 2022, our opening inventory, because of all this unrest and Russian-Ukraine war, we had expensive inventory. Those were carried in our balance sheet. By end of 2023, the inventory valuation became relatively lower. Gradually, those inventories were consumed during 2023. As a result, if you do a comparison between 2023 first quarter and 2024 first quarter, we had a beneficial first half of 2024, our inventory movement was positive. As a result, we had this favorable inventory movement. Gradually, that will get vanished off over a period because 2022 year-end and 2023 year-end, we had a contrasting inventory issue because year-end 2023 or 2022 was an exceptional year.
That will get eased off over a period of time, and we'll get what we call a stabilized inventory movement. That is why in Q2, your inventory movement became negative. This will get offset over the next few periods. You'll have a very stabilized inventory movement, and your margins would get stabilized in the fertilizer segment.
Thanks. That's very helpful.
Your next question comes from the line of Sashank Lanka from Bank of America. Please go ahead.
Yes. Thank you very much for the presentation and the opportunity to ask questions. I have three questions, if that's okay. The first one is on the fertilizer segment. We noticed that your volumes were very strong in Q2. I think at 1.5 million tons, you were probably the highest since the last four or five quarters. Just wondering what's the outlook over the course of the year? Should we assume similar levels of volumes? That's the first question. The second question is, when I look at your realized prices in urea, they were around $291/ ton. Just looking at some of the global peers as well as regional peers who reported, they generally have reported higher urea prices.
I know you, in the past, have mentioned this is related to the volume-weighted average, but just wanted your sense on how the trajectory of pricing in Q3 has been so far versus Q2, specifically for urea. The third question is on dividends. It's good that you have introduced interim dividends. I think in the past, for the annual dividends, you maintained a payout policy of around 80%-85%. Should we assume that implied policy remains for interim dividends as well, given the first half dividend was around 80% payout? Thank you.
Thank you. I will answer your last question with regards to the interim dividends. The other two questions will be answered by Saffan. With regards to the interim dividends, as you are aware, IQ has taken the initiatives from the QatarEnergy, where they want to improve the market and to stabilize it. Everybody has noticed how IQ been very generous in distributing dividends to the market and to the shareholders. This time, IQ have distributed 80% of their earnings for the first half. However, for the second half or for the year-end, definitely this will be adjusted based on the market condition and based on the prices and based on the performance. We will present all these factors to the board for their final decision on the year-end dividends.
We will be waiting for the next six or for the remainder period to see how it will goes with the performance of these companies. We're going to take a call on the year-end dividends. Saffan will answer your first question with regard to the QAFCO volume, which is higher in the second quarter versus the first quarter.
Sashank, the sales volumes were up because during Q1, we had a shipment that got delayed on the last day due to some ship's availability. That got moved into Q2. That's why your second quarter shipment went up. Also we had some shutdowns in Q1, those volumes are also moved into Q2. That's why your volumes are up. Your question regarding how your future volumes would be, that was a function of your production, which is a function of your shutdowns. With respect to your planned shutdown, QAFCO will have a shutdown on the fourth quarter. Other than that, you will have your usual average production based on the historical volumes. Unless otherwise you have unplanned shutdowns, your volumes would remain pretty much historical. Q2 additional volumes coming from a shipment that moved from your Q1 to Q2. Other than that, it is pretty much averaged out.
You had a question, Sashank, about the urea prices.
Urea prices. The prices are around $295-$300. As you know, most of the marginal producers, if the prices goes to $290, there'll be unplanned shutdown will come within the marginal producers. Volumes will go below the market requirement level. Therefore again, prices to go back to $300-$320 level. The prices could float between $300-$340 levels. This could be the long term flow and the cap, unless the 2022 conditions repeat. That would be the cap and the flow.
We thank you gentlemen for your responses. Appreciate it.
Thank you.
Your next question is from the line of Abhinav Sinha from Lesha Bank. Please go ahead.
Thanks for taking my question. A couple from my side. One is on the COGS, what would be the rough split between fertilizer and steel? Would it be like 60/40 or 70/30? The second thing is that you mentioned that it's a combination of a favorable inventory movement and the price. If you look at the urea price compared to 1H23, it's stable in 1H24. I would assume that maximum reduction in COGS has happened due to the inventory movement. Is it the right thing to assume? Lastly, on the QAFAC, the disclosure has been made that QAR 119 million was the revenue which was added to the group from 10th of June to 30th of June. Would it be fair that for the full year we assume it to be what has been disclosed in the annual report?
Let's say for a full year, I think last year it was QAR 2.7 billion. Would QAR 1.3 billion for the remaining six months be a fair assumption? Thanks.
First the question related to COGS.
The COGS, basically, this is the combination of both. If you look at the way how the feedstock mechanism works, there are two elements to the feedstock mechanism. It's based on your year-to-date prices. If you really look at the year-to-date prices, still the current year prices, it is $291 compared to $300+. Obviously there's a price reduction which affects your COGS. Obviously, the inventory valuation is the major contributor as you correctly said. That is the major contribution. The other point, out of the component or the contribution to the overall cost of goods sold, obviously fertilizer contributes the great element to the cost of goods sold within the group. We don't want to quantify it, but fertilizer gives a greater component.
Regarding the QAFAC sales revenue from 10th June to 30th June, you mentioned QAR 119 million. You know QAFAC was consolidated or accounted as a joint venture up to 9th June. From 10th June to 30th June during that period, QAFAC accounted as a subsidiary. When you do the accounting as a subsidiary, you take 100% of QAFAC, then you show the minority interest separately. If you look at the income statement, you will see minority share. This portion is 100% of QAFAC. Actually, 50% of that is related to IQ. 50% is related to minority. Is it clear now?
Basically, it would increase the revenue, the operating profit, but at the net income level it would be same because the 50% is anyways attributed to the minority.
Exactly.
It's eliminated as a minority interest only at the net profit level.
Right. Exactly. Clear. Thanks.
Your next question comes from the line of Oliver Connor from Citi. Please go ahead. Oliver, your line is open. You might be on mute.
Hi. Thank you for taking my questions. The first one's just on demand. You mentioned in your overview around positive signs in China. If we look at the petrochemical segment specifically, any indications of demand improvement globally or in China, sort of Q- on- Q? And then the second question related to Blue Ammonia. It's interesting to see a big acquisition in the U.S. recently. Just trying to get a sense of your thoughts on how the Blue Ammonia market's evolving, vis-a-vis potentially signing offtake agreements for some of your volumes when they come through. Thank you.
Petchem demand? How was it?
Petchem demand, nothing specific. With respect to Chinese petchem demand, what we see with China's support, with respect especially to construction industry, China is buying some of the loans from the banks and the consumers, which will be supportive for petchems as well as the construction industry. The general view, the consensus view is that will support the petrochemical prices. We have seen the petrochemical prices have plowed out in April, May, and now have slightly recovered. We have seen the prices have reached to around $ 1,100 after reaching the bare minimum of $ 1,000. Our view is that it should maintain that $ 1,100 or slightly improve over the next six months.
With regard to the second question of the Blue Ammonia, as you are aware, still the project under construction. With regard to the premium, taken in consideration of the Ammonia, I would say that the full premium have not been recognized yet because it will depend on the consumer appetite. We believe over the time, there will be a recognized premium. We don't know when this will be achieved. I would say in the next two to three years, we will be seeing a higher demand from the consumer towards more greener products. We believe that the premium will be recognized in the future.
Your next question comes from the line of Seki Mutukwa from Ashmore. Please go ahead.
Hi there. Thanks for the call. Two questions, please. One, perhaps for you, Abdulla, a follow-up on the dividend side. Just obviously given the net cash and your expectations on CapEx, et cetera, would you be willing to talk about a floor in terms of a payout ratio? I know you're obviously not going to give an exact number now, but just wondering where you would say is either a range or a floor. The second question is just on the fertilizer space. What is the timing you expect in terms of government tenders from India and maybe China again, possibly in the second half of this year? Thank you.
With regard to the dividends and the expectation of a floor, it will be very hard and difficult for me to answer this question right now. However, I would advise you to make a reference to the historical payout ratios. Maybe this will help you to predict how IQ is, the future of the IQ dividends to the market shareholder.
With respect to specifically the Indian tender, what we have noticed this time, the tender rather than India offering the tender at once or at the bulk, they have divided the tender into small quantities. We have seen small tenders being floated. Maybe they will go with further small tenders in months to come. The past, I think three or four offers have been made. Other than that, we have not heard anything. With monsoon, it's expecting soon in India, already been incoming. Another tender may come up shortly. China, I think there are some export restrictions in China. Maybe, I don't know whether they'll come up with tender because they may be using their own production in China.
Thank you.
Thank you.
Before we move on to the next question, a reminder to please press star one to join the queue. Your next question comes from the line of Soha Saniour from Arqaam Capital, please go ahead.
Hello. Thank you for taking my questions. My question is also regarding the Blue Ammonia project or the Ammonia 7 project. I just wanted to ask, the 1.2 million tons, are they going to all be incremental capacity, or is it a possibility that it will replace some of the existing older Ammonia lines? I think Ammonia line 1 and 2, where at some point, did they consider they would be scrapped and replaced with Ammonia 7 and 9. Just want to get a sense of the incremental capacity or incremental volumes from Ammonia on that end. The second question is regarding the off-take of the Blue Ammonia.
I understand QatarEnergy will be the full off-taker, but is it a safe assumption to assume that it will be sold from your end to QatarEnergy at prices similar to grey ammonia with whatever premium being realized by QatarEnergy, given that they are carrying out the carbon capture and so on? What is the safe assumption here for the pricing of this Blue Ammonia from QAFCO ? Thank you.
Thank you for your question. I would say that it is incremental capacity to the current capacity of the QAFCO. We have highlighted earlier that we're going to do the full revamping of Ammonia 1 and 2 . We're going to keep these two trains. We will consider our Blue Ammonia as an additional capacity to our fertilizer. With regard to the take-off agreements, as you correctly highlighted that QatarEnergy will take off all the quantities. However, the pricing mechanism still has not been agreed on. However, there will be, I would say, charges for the carbon capture that will be a fees or tariff, small amount. It's not something that will recover the investment done by QatarEnergy. No, we don't think so. It is just a fees or a tariff. The prices also should provide us with a premium.
However, we're still at very early stage. We cannot comment on a future, I would say, prices where we are not certain on the macroeconomics at that time and about the appetite of the consumer related to the Blue Ammonia.
Thank you.
The final follow-up question from Ricardo Rezende from Morgan Stanley. Please go ahead.
Hi. Just a follow-up on your last comment. Have you already signed a CCS contract with QatarEnergy? Thank you.
Still this contract not been finalized. We have not entered into any negotiation yet. However, we have agreed on a principle that there will be some charges on the carbon capture facility.
Great. Thanks.
Your final question today comes from Yousef Husseini from EFG Hermes. Please go ahead.
Hi. Thank you so much for the call and allowing us to ask questions. Just one from me. Was just wondering if you guys have heard anything about potential corporate taxes in Qatar and if those would apply to IQ? Thank you so much.
Still nothing. I would say that they will continue with the same status. Nothing come to us. We are exempted, especially like IQ in the listed market, and we are exempted from the tax.
That concludes our Q&A session for today. I would like to hand back over to Bobby for any further remarks.
Thank you. I f this is the last two questions, we can end the call for today. I want to thank Abdulla, Rashid, and Saffan for taking the time to answer our questions, and we will pick this up next quarter. Thank you, everyone.
Thank you so much. Much appreciate.
This concludes today's conference call. Enjoy the rest of your day. You may now disconnect.