Mesaieed Petrochemical Holding Company Q.P.S.C. ($MPHC)

Hello, everyone, and welcome to the Mesaieed Petrochemical Holdings Conference Call. Please note that this call is being recorded. Also, please note that there will be no question-and-answer session for today's session. Thank you. I'd now like to hand the call over to Dana from QNB. Please go ahead.

Hello, everyone. This is Dana Sowaidi from QNB Financial Services. I would like to welcome everyone to Mesaieed Petrochemical Holding Company's First Quarter 2026 Financial Results Conference Call. On this call from QatarEnergy's Privatized Companies Affairs, we have Abdulla Yaqoob Al-Hay, Manager; Rashid Hamad Al-Mohannadi, Head of Investor Relations and Communications; and Sami Mathlouthi, Assistant Manager, Financial Operations. We will conduct this conference call with the management to reviewing the company's results. I will now turn the call over to Rashid. Please go ahead.

Thank you, Dana. Good afternoon, and thank you all for joining us. Before we go into the business and performance updates, I would like to mention that this call is purely for investors of MPHC and no media representatives should be attending this call. Moreover, please note that this call is subject to MPHC disclaimer statement as detailed on Slide #2 of the IR deck. Now we can move to the call. On Thursday, 30th of April 2026, MPHC published its results for the 3 months period ended 31st of March 2026. And today in this call, we'll go over these results and provide you on key updates on financial and operational highlights. Today, on this call, along with me, I have Mr. Abdulla Yaqoob Al-Hay, Manager for Privatized Company Affairs; and Mr. Sami Mathlouthi, Assistant Manager for Financial Operations. We have structured our call as follows. At first, I'll provide you with a quick insight of MPHC ownership structure, its competitive strength and overall governance structure. Then Sami will brief you on MPHC financial operation and operational performance. And finally, also, Sami will brief you on segmental performance. To start with details on slide -- on the IR deck, the ownership structure of MPHC compromises of QatarEnergy with approximately 57.5% stake and the rest is in the free float held by various domestic and international corporate and individuals. QatarEnergy being the main shareholders of MPHC provides most of the head office functions through our service level agreement. The operations of MPHC joint venture are independently managed by their respective Board of Directors, along with the senior management team. In terms of the competitive advantages, as detailed on the IR deck, all of the MPHC group companies are strategically placed in terms of competitively priced and assured feedstock supply under long-term arrangement, solid liquidity position with a strong cash flow generation capability and the presence of well-established joint venture partners. Additionally, its partnership with QatarEnergy Marketing acts as a catalyst for its access to the global market. In terms of the governance structure of MPHC, you may refer to the IR deck, which cover various aspects of MPHC code of corporate governance in more detail. I will now hand over to Sami. Over to you, Sami.

Thank you, Rashid. Good afternoon, everyone, and thank you for joining us. In line with MPHC's previous announcement, the group implemented production suspensions and the reductions for selected products. Accordingly, MPHC operational performance during this period declined with overall production levels decreasing across both segments. The ongoing regional conflict further impacted overall operation conditions, contributing to heightened uncertainty, supply chain disruption and volatility in energy and feedstock markets. These factors collectively weighed on production stability and performance during the current period. On a quarterly basis, production decreased in both operating segments. Moving on to financial performance. MPHC reported a net loss of QAR 1 million for the 3-month period ended 31st of March 2026, reflecting 101% decline compared to the same period of last year. The decrease in profitability was mostly driven by 7% lower average selling prices, which negatively impacted revenue. The price weakness was largely attributable to prevailing macroeconomic headwinds, softer global demand condition, overall market volatility and the ongoing regional conflict. Consistent with the reduction in product sales prices, MPHC experienced lower sales volumes during the first quarter of 2026 by 27%, driven by the ongoing regional conflicts, which affected the operational performance across both segments and consequently attributed to the overall decline. EBITDA for the period declined by 61% compared to first quarter 2025, largely due to weaker top line performance. Margin compression was also observed in first quarter 2026 driven by lower average selling express across both segments. MPHC's bottom line profitability reported a net loss compared to the previous quarter, mainly due to lower group revenue across both segments. Decline in selling prices across both the petrochemical and chlor-alkali segments together with lower sales volumes by 21% under pressure from external challenges linked to weaker macroeconomic conditions resulted in margin compression during the period. The petchem segment was primarily affected by subdued demand for high-density polyethylene products amid persistent global oversupply. At the same time, the chlor-alkali segment experienced a weaker downstream demand driven by slower construction activity, reduced industrial consumption and elevated inventory levels. Overall, the combined impact of revenue declined by 20% and margin compression led to a significant drop in quarterly profitability. Now moving to segmental performance and starting with petchem segment. The Petrochemicals segment delivered a net profit of QAR 12 million for the currency, posting a 92% decline compared to the same period of last year. Weaker operational performance characterized by lower production by 25% and sales volumes by 24% negatively impacted the overall performance. At the same time, commodity prices remained under downward pressure amid continued global oversupply, subdued demand in key end markets and persistent macroeconomic uncertainty. These factors adversely affected margins during the period. On a sequential quarterly basis, segmental profitability declined by 33% largely due to softer revenue by 17%, resulting from lower selling prices by 4% and reduced sales volumes by 15%. The weakness in pricing was driven by subdued demand for high-density polyethylene products amid continued global oversupply. The prior quarter was characterized by unusually low production output due to the planned turnaround. Moving on to chlor-alkali segment. The chlor-alkali segment reported a net loss of QAR 33 million for the first quarter of 2026, marking a sharp decline of 336% compared to the same period of last year. Performance was adversely affected by a continuous decline in average selling prices by 11%. Pricing pressure stems for ongoing macroeconomic headwinds, weak downstream demand and a slowdown in construction and industrial activity. High global inventory level alongside declining crude oil prices further dampened market sentiment. On a quarter-on-quarter basis, the segment reported a net loss for the fourth consecutive quarter. In comparison to the fourth quarter of 2025, the downward trend intensified during the period, driven primarily by a sharp contraction in sales volumes by 30%, while selling prices remained sequentially stable. The pronounced drop in volumes led to a significant reduction in revenue by 29%, which in turn resulted in materially higher segment losses compared to the previous quarter and weighed heavily on the group overall performance. With that, we conclude our call. We would like to thank our investors for their continued trust and support, and we look forward to speaking with you again during the next earnings call.

[indiscernible] today's call. You may now disconnect. Goodbye.