Hello, welcome to Mesaieed conference call. Please note that this call is being recorded. You will have the opportunity to ask questions to our speakers later on during the Q&A session. If you'd like to ask a question by that time, please press star one on your telephone keypad. Thank you. Now, I would like to hand the call over to Dana. You may begin.
Hello, everyone, [Non-English content] to you all . This is Dana Al-Sowaidi from QNB Financial Services. I would like to welcome everyone to Mesaieed Petrochemical Holding Company's second quarter 2025 financial results conference call. On this call for management, we have Rashid Hamad Al-Mohannadi, Head, Investor Relations and Communications, Privatized Companies Affairs, QatarEnergy, and Sami Mathlouthi, Assistant Manager, Financial Operations, Privatized Companies Affairs, QatarEnergy. We will conduct this conference call with management first reviewing the company's results, followed by a Q&A session. I will turn the call now over to Rashid. Please go ahead.
Thank you, Dana. [Non-English content] . Good afternoon, thank you all for joining. Before we go into the business and performance updates, I would like to mention that this call is purely for MPHC investors, no media representatives should be attending this call. Please 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. Please note this call is subject to MPHC disclaimer's statement as detailed on slide number two of the IR deck. Moving on to the call. On Tuesday, 12th of August 2025, MPHC published its results for the six-month period ended 30th of June 2025. Today through this call, we'll walk you through the key financial and operational highlights.
Today on this call along with me, I have Mr. Sami Mathlouthi, Assistant Manager for Financial Operations. As we structured our call as follows. At first, I'll provide you with a quick insight of MPHC ownership structure, its competitive strength, overall governance structure by covering slides five till 10, slides 41 and 42 of the IR deck. Secondly, Sami will brief you on the macroeconomic environment, dividend distribution, and overview of the results. Sami will top it up with the segmental performance updates. Finally, we'll open the floor for the Q&A. To start with, as detailed on slide number five of the IR deck, the ownership structure of MPHC comprises of QatarEnergy with approximately 57.9% stake, the rest is held in the free float by various international and domestic investors.
QatarEnergy, being the main shareholder for MPHC, provides most of the head office function through a service level agreement. The operation of MPHC joint venture are independently managed by the respective board of directors, along with senior management. In term of the competitive advantages, as detailed on slide number eight, all the MPHC group companies are strategically placed in term of competitively priced and secure feedstock supply under long-term arrangements, solid liquidity position with strong cash generation capability, and the presence of the most reputable joint venture partners. Additionally, its partnership with QatarEnergy Marketing acts as a catalyst for its access to the global market. As detailed on slide 10 for our competitive position and perspective, MPHC ranks among the top three companies in the regional chemical space across most of the metrics, and specifically leads the chart in term of the profitability margins.
In term of the governance structure of MPHC, you may refer to slide 41 and 42 of the IR deck, which covers various aspects of MPHC code of corporate governance in detail. Now, I will hand over to Sami to take you through the presentation.
Thank you, Rashid. Good afternoon, and thank you all for joining us. Let me begin with a quick look at the macroeconomic environment. In the first half of 2025, the petchem industry continued to face significant headwinds. Demand for key products like ethylene and its derivatives remained subdued due to weak industrial activity and cautious consumer spending. At the same time, global capacity expansion led to low utilization rates and intensified competition, which squeezed margin and caused delays or shutdowns in some projects. Price volatility driven by fluctuating feedstock and energy costs, especially crude oil, added further uncertainty, particularly for naphtha-based producers. Regulatory pressures around environmental compliance also weighed heavily on operators, especially those managing older assets with limited capital flexibility. For MPHC, these industry-wide challenges translated into year-on-year decline in commodity prices across its product portfolio, continuing the downward trend observed in the first half of 2025.
This softness in pricing followed two years of elevated levels and was largely driven by subdued global demand, increased supply from new capacities, and heightened competitive pressures. In addition, fluctuation in feedstock and energy costs, particularly crude oil and ethylene, added to the pricing volatility. Combined with ongoing economic uncertainty, these factors led to more cautious purchasing behaviors and contributed to margin compression across the sector. Looking at our financial performance, MPHC reported a net profit of QAR 379 million for the six-month period ending 30th of June 2025. This reflects decline of 5% compared to the same period last year. The reduction in profitability was primarily driven by a 6% drop in average selling prices, which led to decreased revenue.
On the interim dividend front, the board of director has approved an interim cash dividend of QAR 0.026 per share, representing 85% of net profit for the period. This payout reflects our strong financial position and operational excellence. The dividend will be distributed to shareholders registered as of 20th of August 2025, in coordination with Edaa. Now diving into detailed financial analysis. Comparing MPHC financial performance for first half 2025 versus the same period of last year, as referred in slide number 16, MPHC reported a net profit of QAR 379 million for the six-month period ended 30th of June 2025, down by 5% compared to the same period last year. This decline in profitability was mainly linked to lower selling prices, partially offset by an increase in sales volumes in both segments.
The drop in group revenue was mainly linked to the decrease noted in average blended product prices, which declined by 6% compared to first half 2024. This has translated into a negative price variance of QAR 66 million in MPHC current net earnings compared to the same period last year. Subdued product demand amidst macroeconomic uncertainties resulted in lower commodity prices. On the other hand, blended sales volumes increased by 5% compared to the same period of last year, mainly driven by high sales volumes reported by both segments. This positive movement in blended sales volumes translated into an increase of QAR 42 million in MPHC first half 2025 net earnings compared to the same period of last year. EBITDA for the current period noted decline versus first half 2024, mainly due to lower revenue.
In addition, the drop in average selling prices was partially offset by higher production and subsequent sales volumes within both segments, negatively impacting the group overall EBITDA. However, the EBITDA margin declined marginally from 44%-43% in the current period. These factors collectively contributed to the decrease in financial performance observed in the six-month period under 30th of June 2025. The company's financial performance was weighed down by weaker earnings from the Chlor-Alkali segment, alongside a decline in income from fixed deposits due to the prevailing low interest rate environment. These negative factors were partially offset by improved results from the Petrochemical segment. Consequently, the overall impact on the company financial results was lower compared to last year. Regarding the financial position, as shown on slide number 15, liquidity remained robust, with cash and bank balances standing at QAR 3.2 billion as of 30th of June 2025.
The decline in cash and bank balances was mainly due to dividend payments for the second half interim dividend, in addition to the payment of MPHC portion in the financing for the PVC project, partially offset by positive cash flow generation during the first half of 2025. Moving to the segmental review, we'll start with the Petrochemical segment as covered in slide number 21 through 25. The Petrochemical segment delivered a net profit of QAR 333 million for the first half of 2025, making an improvement over the same period last year. This growth was primarily driven by better margin, supported by lower operating costs, and a 5% increase in sales volumes, which in turn were enabled by higher production levels. Despite a 4% decline in commodity prices, pressured by ongoing macroeconomic uncertainties, global oversupply, and softer demand. Volume growth and cost efficiencies helped sustain profitability.
On a quarter-on-quarter basis, segmental profits rose to QAR 181 million during second half of 2025, reflecting an 11% increase yearly. This was driven by a 7% improvement in selling prices and a 4% rise in sales volumes. The uptick in price signals a modest recovery in product pricing in line with broader market trends, while the volume increase was supported by enhanced production and operational performance. Moving on the Chlor-Alkali segment, as detailed on slide 26 to slide 30, the segment reported net profit of QAR 8 million for the first half of 2025, reflecting a sharp decline of 78% compared to the same period last year. This drop was primarily driven by a 12% decrease in average selling prices, which fell to levels last seen during the peak of the COVID-19 pandemic.
The decline was fueled by persistent macroeconomic pressures, sluggish demand from downstream sectors, and weak construction and industrial consumption. In addition, elevated global inventory levels and lower ethylene prices aligned with the decline in crude oil further dampened market sentiment. On a more positive note, sales volumes improved by 4%, supported by enhanced plant availability and stronger production performance. However, the benefit of higher volumes was fully offset by the adverse impact of lower pricing, limiting the segment's profitability. Quarter-on-quarter, the segment posted a net loss of QAR 7 million, reversing its profitable position from Q1 2025. This was mainly due to an 11% drop in selling prices, which have now reached one of their lowest levels since the pandemic. While sales remained relatively stable, the steep decline in pricing significantly compressed margins, resulting in a loss for the quarter. I would now hand over to Rashid.
Thank you, Sami, for the presentation. That concludes our presentation as a management, now we open the floor for Q&A.
Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. Thank you. Your first question comes from the line of Lee Bastick with QNB. Your line is now open.
Hi, thanks for the presentation. Just a question on the operating rates on page 17. I was just noticing that all three, or the two segments and therefore the group, are now above 100%. How sustainable is that? What's the sort of realistic operating rate that you can get to? Are there any planned maintenance that you're undergoing for the second half?
Thank you for the question. I think, in terms of utilization, it's depending on many factors. Depending on the availability of feedstock, depending as well on the maintenance programs that each asset will take during the year. For the Q1 and Q2, luckily enough, I think most of the assets, they didn't have any unplanned shutdown except for QVC, where we have on average three days, and this is below the levels that we are having normally for this plant. We have a planned shutdown in Q4 2025 for QChem 2. That's for around 45 days. This is planned and this is cyclic. Every five years, we have those planned turnarounds, which are taking place to improve the efficiency of the assets. For the level which are above the 100% utilization, it's normal.
I think if you look at the history, especially for the petchem segment, it's always achieving a higher level of utilization compared to the plant capacity. For QVC, I agree with you, this is not normally the trend, so this is an exceptional achievement for the production levels have been very high. In the normal levels, the plant is having on average per month, one to two days of unplanned shutdown. Which will take the average utilization normally should be standing at around 90% of the plant capacity.
Thank you.
Your next question comes from the line of Saki Muthukumar with Ashmore Group. Your line is now open.
Hi. Thanks, Rashid and Sami. Wondering, since the end of the second quarter, and with maybe a little bit more news flow globally about agreed tariff rates, et cetera, are you noticing any sort of behavioral changes with the customer base? I know it's a very short period we're talking about. Curious as to whether that's resulting in an uptick in demand in any way, or you're seeing price stabilization, maybe in Chlor-Alkali as well? Thanks.
In term of the market for MCAE, I think most of our products are sold outside the U.S. market. I don't think historically we reported. If we reported, it will be very minimal. The impact directly on us is immaterial for us from that sense, that we are not selling directly in the U.S. The impact that will have in the price will depend on the market itself, the situation of the region that we are selling in. Up to now, we can see the reflection on the prices. The prices were down due to the softening demand aspect. We've seen petrochemical prices improve quarter and quarter, the Chlor-Alkali specifically was declining due to the link to the industrial base consumers, and also due to the sluggish demand aspect, as well as the oversupply in the market in the EDC/VCM markets.
That, in a nutshell, what we see as a company. Hope I answered your question, Saki.
Just on that, I was asking sort of since the end of the second quarter, has any trend changed, granted it's a short period of time. The link with the tariffs was more sort of not necessarily for you yourselves in selling, but from your customer base if they were hesitant just because they were waiting for a bit of clarity. I think you've covered that first bit. Just on the second one, if there's anything to note since the end of June.
We did not see anything that is, I would say, that I would like to bring to the investor attention. As we always said, as in PAC, we are on the lower side of the curve and we'll move with the market. We are not a market leader here. We're selling our product based on the market price, and we're hopeful that the demand in the second half could pick up if interest rates are going down, and that's what we are hearing from the market. That will give us a bit of uplift in terms of consumption. We are hopeful that second half could be better than the first half, let's wait and see.
Thank you.
At this time, I would like to remind everyone in order to ask a question, press star then the number one in your telephone keypad. There are no further questions. I will now turn the call back over to Dana for closing remarks.
If there are no more questions, we would like to thank the company's management for the results update and for taking the time to answer all queries. We look forward to speaking to you all for the third quarter results. Thank you.
Thank you.
Ladies and gentlemen, that concludes today's call. Thank you all for joining.