Qatar Fuel Company Q.P.S.C. ("WOQOD") (QFLS) Earnings Call Transcript & Summary

Hello, and welcome to WOQOD Conference Call. Please note that this call is being recorded. You will have the opportunity to ask questions for our speakers later on during the Q&A session. [Operator Instructions] Now I would like to hand the call over to Phibion. You may begin.

Thank you, Angela. Good morning to you all, and thank you for joining us this morning for WOQOD's Second Quarter or First Half of 2025 Earnings Conference Call. On today's call from the WOQOD management team, we've got 3 members: the CFO, Pradeep Kumar; the Finance Manager, Abdulrahman Al-Hammadi; and the IR Officer, Ahmad Said Al-Mansoori. And as usual, they will first present the numbers, and they will have a Q&A session immediately afterwards. Let me turn over the call to Ahmad to begin. Over to you, sir. Please go ahead.

Thank you, Phibion. Good day to all the participants, and we hope everyone is keeping safe and healthy. We welcome you all to WOQOD's Second Quarter and June 2025 Results Conference Call and appreciate your participation as WOQOD is committed to continuously enhance its investor relations initiatives. This is to strengthen our communication and improve transparency with all members of the global investment community. The presentation of this call will be available on the Investor Relations section of our website. Any statement that refers to expectations, projections, guidance or any other characterization of future events, including financial projections or future market conditions, is a forward-looking statement based on the assumptions today. Actual results may differ materially from those expressed in these forward-looking statements. The company cannot disclose any commercially sensitive information due to the confidentiality agreement signed with suppliers. Please refer to Slide #2 for the full version of the disclaimer statement. All figures expressed in this call are Qatar riyal, and the conversion for the same to U.S. dollar is QAR 3.64 to USD 1. Now I would like to hand over the call to our Finance Manager, Mr. Abdulrahman Al-Hammadi, to provide a brief overview of WOQOD and update on the key operational activities.

Thanks, Ahmad. The key vision of WOQOD is to be the leading petroleum product distribution and related services marketing company in the region. On Slide #4, which shows the overview of WOQOD Group. WOQOD started operation in 2002 with exclusive rights for the storage and distribution of petroleum products in the State of Qatar. Operations started with 2 petrol stations in 2003 and has grown to 125 stations at the end of June 2025. The chart on the right shows WOQOD stations network. WOQOD also owns and operates 13 Fahes centers for inspection of vehicles across the State of Qatar. Slide #5, which shows the key operations of WOQOD Group. The key operations of WOQOD Group are; diesel and gasoline fuel distribution and sale, jet fuel distribution and sale, shore-to-ship and ship-to-ship bunkering, LPG distribution sales, natural gas distribution and sales, fuel bunkering, bitumen operations, C-Store and auto care activities, vehicle inspection services and office leasing. Turning to Slide #7, which shows the diesel and gasoline fuel sales volume trend analysis. As mentioned before, the core activities of WOQOD is the fuel distribution and sales in the State of Qatar. The total fuel sales is lower by 1% during the first half 2025 vs first half 2024, driven by market demand. Diesel sales volume decreased by 2% during the first half 2025 vs the same period last year, driven by macroeconomic factors. Combined gasoline sales volume increased by 2% in first half 2025 as compared to first half 2024. On a quarter-on-quarter basis, sales volume for second quarter 2025 increased by 12% and 5% for diesel and gasoline, respectively. Average fuel price for diesel and gasoline decreased by 2% and 1% in half 2025 compared to the same period last year. Turning to Slide #8, which shows the jet fuel sales volume comparison. Jet fuel sales were lower by 2% for the first half 2025 as compared to the same period last year, driven by market demand. On a quarter-on-quarter basis, jet fuel sales volume for second quarter 2025 increased by 6%, driven by market demand. Jet fuel price for the first half 2025 decreased by 15% as compared to the same period last year, driven by change in crude oil prices. Combined sales volume for all petrol products decreased by 1% for first half 2025 as compared to the same period last year. Turning to Slide #9, which shows the quarterly trend of retail fuel sales volume trend. Overall, retail fuel volume of WOQOD petrol station increased by 2% for first half 2025 against the same period last year, driven by increased market demand. On a quarter-on-quarter basis, retail fuel volume in the second quarter 2025 increased by 6% and 5% for diesel and gasoline, respectively. The market share of WOQOD in the petroleum retail market in the State of Qatar reached about 85% during the first half 2025. Nonfuel retail sales decreased by 9% during the first half 2025, mainly on account of decrease in APC. Now I would like to hand over the call to our CFO, Mr. Pradeep Kumar, to discuss the key financial results.

Thanks, Abdulrahman, for all the volume updates. Good day, everyone. I would like to discuss the consolidated financial results of WOQOD for the first half of 2025. Slide 11 shows the revenue trend of WOQOD. Revenue from fuel sales account for nearly 97 percentage of the total revenue. WOQOD achieved total revenue of QAR 12.5 billion during the first half of 2025 as compared to QAR 13.9 billion during the same period last year, showing a decrease of 11 percentage, which is mainly driven by overall decrease in fuel sales volume by 1 percentage and decrease in average sales price by 10 percentage. On a quarter-on-quarter comparison basis, the total revenue decreased by 3 percentage during the second quarter 2025, mainly driven by increase in sales volume by 6 percentage, partially offset by decrease in average sales price by 8 percentage. Turning to Slide 12. WOQOD has made a net income of -- one second. Turning to Slide 12, which shows the net income trend analysis, WOQOD has made a net income of QAR 460 million for the first half of 2025, lower by 4.5 percentage as compared to the same period last year, mainly due to a decrease in overall fuel sales volume by 1 percentage and decrease in other income. WOQOD has made a net income of QAR 230 million for the second quarter 2025 as compared to QAR 239 million during the same period in '24, representing a decrease of 4 percentage. On a quarter-on-quarter basis, the net income for second quarter 2025 remained stable at QAR 230 million. The detailed analysis of net income variance is given in the next slide. Slide 13 shows the key variance analysis of net income for the first half of 2025 as compared to same period last year. The decrease in net income of QAR 22 million is due to the following major factors. Net operating margin increased mainly driven by cost-optimization initiatives, partly offset by the lower volumes. B2B segment margin increased mainly due to higher transportation income during the first half of 2025 as compared to same period last year. Trading stock price variance is mainly driven by impact of price movements, mainly on jet fuel inventories. Dividend income and others lower mainly driven by timing of interim dividends. And lower interest rates, mainly due to prevailing market condition, which is partly offset by lower G&A expenses. Based on the earnings of first half of 2025, the Board has approved an interim dividend of QAR 0.4 per share. WOQOD's fundamentals continue to remain robust, and WOQOD is committed to meet all its strategic goals while placing safety as a top priority. WOQOD has a strong leadership committed towards delivering results to the shareholders. With this, we are ready for the Q&A session. Thank you.

[Operator Instructions] Your first question comes from the line of Rob Skepper with Ashmore.

A few questions for me, if I may. I guess, firstly, just on the core business, maybe thinking about volumes a little bit. So yes, I mean we saw some recovery in diesel and gasoline in the quarter. Obviously, jet fuel volumes still slightly below. But yes, how are you kind of thinking on the volume side into the second half? Are there any kind of visible demand catalyst, which could help firm things up at all to your mind?

Being a sole distributor, we distribute whatever the market demands and purely depending on the market demand. However, traditionally, we have seen the demand for the second half comparatively higher. So we expect the same this year as well.

Okay. And just specifically on the jet fuel side of things, just thinking about kind of end customer mix there, like Qatar Airways, foreign carriers, noncommercial jet fuel volumes, like what's happening? Can you give us some color on the end markets there specifically or the end customers?

Definitely, Qatar Airways dominate the market on the jet fuel.

Okay. And so you're seeing weakness from them essentially? Or there's other weakness as well?

Well, other players also in the market, but very minor as compared to Qatar Airways.

Yes. Okay. Just thinking about kind of the margins in this price environment, like in the second quarter, obviously, when we look at underlying Brent prices, we saw massive volatility, right? Start of the quarter, huge collapse in oil price on tariff news out of the U.S. and then kind of later in the quarter, huge geopolitical premium -- risk premium again in the oil price, all in the space of 1 quarter. Like I mean, how -- did this impact like the margins at all? Like I know obviously, you give that piece on Slide 13 with the income variance and this kind of trading stock price volatility. But I just wondered, is there anything you do on procurement when prices are low to try and mitigate? Do you kind of ease off when prices are high? Like yes, how did that impact the business at all?

Well, for us, the supply prices are regulated by the State of Qatar through QatarEnergy. And on the other side, definitely, the major impact is on our trading fuel stocks, which we kind of manage from quarter-to-quarter.

Yes. Okay. And then the last question I had was just on kind of the nonfuel and maybe some of the comments on the EV side of things. So yes, I guess, I think you're kind of continuing to roll out kind of EV chargers throughout the network. And you've done a bit of optimization of kind of nonfuel retail. But I guess looking at that nonfuel business, it's kind of declined, kind of double-digit decline last year and still seems a little bit weak. Is there anything on the nonfuel side of things that you're kind of looking at strategically? Or how should we think about kind of profitability going forward?

Well, on the first part of your question on the EV segment, yes, WOQOD is preparing for any future demands. We already have 25 EVs installed to meet the demand in future. On the other side, nonfuel segment, definitely facing a lot of headwinds from the market, and we are strategizing to improve that area, and we are focusing on that area also in the future.

Okay. Do you -- is there sort of an ongoing process at the moment? Like would you expect to communicate something around some of those initiatives on kind of the next quarterly call or sometime later? Is there a time line for that?

Well, we are working on it and working on many verticals associated with the retail segment to improve it, which -- we are working on it at this point.

Your next question comes from the line of Zohaib Pervez with Al Rayan Investment.

So there are a number of projects that have been announced by the government like the Simaisma project, et cetera. Do you -- are you seeing any improvement in your bulk diesel business because of the announcement of these projects? Or are you seeing any inquiries, et cetera, due to project development improvements? My second question is on the price of jet fuel. So jet fuel price, has it come down even more further quarter-over-quarter in the second quarter?

On your first part of the question regarding the developments, definitely, we expect that such developments will contribute to increase in our bulk sales, and we are looking forward to that. On the other side, yes, jet fuel was volatile during the first half and definitely has reduced in the first quarter as well as the second quarter.

But you don't -- you still haven't seen any movement on the bulk. So the bulk volumes, I assume, are still lower for diesel because of the slowdown in economic activity.

We can see some slow picking up in the second quarter, but definitely, we're looking forward to major projects to pick up considerably in that segment.

There are no further questions. I would now like to hand the call back over to Phibion for any closing remarks.

Thank you, Angela. If there are no further questions, it brings us to the end of our call today. I would like to thank the management team for taking time to update and respond to investor questions. Please do join us for future calls, and enjoy the rest of your day.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.