Qatar Industrial Manufacturing Company Q.P.S.C. (QIMD) Earnings Call Transcript & Summary

Good morning, everybody. Welcome to QIMC's investors conference call for the half year ended 30th June 2026. We are happy to see you all here. And we have in the meeting room in QIMC office, Mr. Abdul Rahman Bin Al-Ansari, our CEO; Mr. Mazen, our Head of Accounting; and Mr. Yazan, one of our Chief Accountants; and myself, Surya Narayanan, business analyst, I have joined virtually in this meeting. And the meeting will be like this initially, I'll make the presentation about our performance during the 6 months, and then we'll open the floor for a Q&A, which will be handled by our CEO. So let me straight away ahead to our presentation. Hope you can all see the presentation. This presentation has got 3 broad segments. First is the company overview, then we have financial performance and then operational highlights. So we'll start with the company overview. As you all know, QIMC was established in 1990 as a Qatari public shareholding company. We've been listed on the Qatar Stock Exchange from inception. We have a paid-up share capital of QAR 475.2 million. That's 475.2 million shares of nominal value of QAR 1. QIMC's core competency lies in establishing and managing small- and medium-sized manufacturing companies. We have a highly diversified portfolio across chemicals, petrochemicals, energy services, construction materials, paper and plastic and food processing. We have 8 subsidiaries and 12 associates. First, we'll have a quick look at our subsidiaries, starting with Qatar Acids, which produces sulfuric acid. We have 100% stake in this company. Then we have KLJ Organic Qatar. In this company, we have 60% stake and 40% stake is held by Indian company, KLJ India. And this company produces chlorinated paraffin wax, caustic soda prills, hydrochloric acid and hypo. Then you have Qatar Sand Treatment Plant, which produces washed sand and aggregate. We have 100% ownership of this company. Then we have National Paper Industries Company which produces facial tissues, toilet rolls, kitchen rolls. And this company is also 100% owned by us. The next company is Qatar Metal Coating Company, in short called Q-Coat. This is a joint venture with Qatar Steel. We have 50% stake and Qatar Steel has got 50% stake. This company produces epoxy-coated steel bars. And then we have Taabia, which is a tea packaging company, which is a very small enterprise. Then we have Gizaz, which is one of our newest enterprises. This is a glass manufacturing company. We're the only glass manufacturing plant here in Qatar, which produces glass bottle jars and containers. In this company, we have 50% ownership and remaining 50% owned by other people. Then we have Qatar Paving Stone, which produces hollow blocks, interlocks, paving stones, curb stones of very high quality. This company is adjacent to Qatar Sand Treatment plant in Umm Ba. And this company is also 100% owned by us. So these are our subsidiaries. Now we move on to our associates, starting with Calix, Qatar Aluminum Extrusion Company, in which we have got 52% stake. The remaining is held by Salam International and other companies. This company produces special purpose aluminum profiles of different shapes and colors. We can produce anodized powder coated and different special purpose aluminum profiles, the only aluminum profile manufacturing company in Qatar. Then we have Qatar Plastic Products Company, which produces FFS films, shrinkable film, wooden pallets and so on. It has got a subsidiary called Qatar Wood Product Company as well. In QPPC, we've got 2/3 stake and remaining 1/3 stake is held by QAPCO. Then we have Qatar Jet (QJET) -- Qatar Jet Aviation Fuel Company, which does aviation fuel distribution. In this company, we've got 40% stake. The remaining 60% is held by WOQOD. Then we have GFC Gulf Formaldehyde Company, which produces urea formaldehyde, urea condensate. This is a joint venture with QAFCO. We have a 30% stake and remaining is held by QAFCO. And then we have Gasal, which is the industrial gases manufacturing company that produces liquid oxygen, liquid nitrogen, hydrogen and argon. We have got 29.5% stake in this company and the remaining is held by Qatar Energy and Air Liquide France. Then we have United Chemicals which produces calcium chloride. And this is a subsidiary of KLJ Organic Qatar. KLJ Organic Qatar owns 65% in this company. This company takes hydrochloric acid from KLJ and another company called Gulf Chlorine to produce calcium chloride. Then we have Mahaseel, which is -- in which we have 20% stake, remaining 80% is held by Hassad Food and it has got a subsidiary called Tunisian Food and Marketing Company, which bottles and markets olive oil. The olive oil is sourced from Tunisia and the bottling happens here. Then we have Qatar Saudi Gypsum Company, which produces gypsum powder. We have got 1/3 stake in this company. Then we have Amiantit Qatar Pipes Company, which produces glass reinforced pipes. And in Amiantit, we have got 40% stake. And FiberTie is also glass reinforced pipes manufacturing company, but using a different technology for a different utility. Amiantit Qatar Pipes has got a 75% stake in FiberTie, and there are other foreign investors in FiberTie. And finally, we have Qatar Clay Bricks Company, which produces concrete block, curb stones and holding blocks and large-sized curb stones. In this company, we have got 46.5% stake and remaining is held by other Qatari investors. So that completes our portfolio in terms of subsidiaries and associates. We have an ongoing project called Qatar Salt, which is a JV which is supposed to be a JV with Missile Petrochemical Holding Company. And this will ensure Qatar self-sufficiency by producing industrial and table salts to meet the local market demand as well as for regional international export. This will also produce industrial salt necessary for the petrochemical industry as well as bromine, potassium chloride, demineralized water, which will allow for product diversification. Now we'll move on to the financial performance of the company during the first 6 months of 2026. The total assets of the company as of 30th June stands at QAR 4.39 billion compared to INR 4.17 billion at the end of the second quarter of last year. Out of this, the total current assets stands at INR 642 million compared to QAR 537 million same period last year. Total noncurrent assets, QAR 3.75 billion compared to QAR 3.63 billion. The total current liability is QAR 636 billion compared to QAR 500 million as of 30 June of 2025. the working capital is QAR 5.82 million compared to QAR 37.53 million. The total equity to shareholders stands at QAR 1.98 billion compared to QAR 1.95 billion at the end of 30th June 2025. The gross income during the first 6 months was QAR 210 million compared to QAR 232 million in the first 6 months of last year. The profit before tax and provision is QAR 31.13 million compared to QAR 61.82 million. Our income includes other income, which is QAR 42.71 million compared to QAR 22.55 million in the first 6 months of last year. The EPA stands at 0.05 -- probably 0.065 compared to QAR 0.13 last year. The net profit is QAR 31.13 million compared to QAR 61.82. Net book value per share is QAR 4.17 compared to QAR 4.11. The equity attributable to noncontrolling shares stands at INR 94.02 compared to QAR 59.95 at the end of 6 months last year. So as we spoke, the total revenues during the first 6 months was QAR 210.32 million compared to QAR 232.29 million and net profit is QAR 31.13 million compared to QAR 61.82 million. Now this is a waterfall chart, which shows the changes in the different components of our income and expenditure starting from last year, how we reached this year. So during the first 6 months of last year, it was QAR 61.82 million net profit. From that, if you compare this year, there's a decline in the gross profit by QAR 16 million. And then share of results from associates is down by about QAR 8.7 million. Sales and administration expenses [ are ] increased by QAR 30.4 million. Dividend from shares is up by QAR 2.5 million and other income is up by QAR 17.6 million. Finance cost has increased by QAR 7.74 million and nonoperational gain is almost the same one just a difference of QAR 1 million. Noncontrolling interest is up by QAR 13.57 million, leaving our net profit at the end of 30th June 2026 at QAR 31.13 million. And total assets, QAR 4.39 billion compared to INR 4.17 billion at the end of the first 6 months of 2025. Total equity, QAR 2.08 billion compared to QAR 2.01 billion at the end of first 6 months of 2025. So you can see that the EPS is QAR 0.065 compared to QAR 0.13 and our return on assets is 0.73% compared to 1.54% for the first 6 months of last year. So operational highlights, which will focus on our update on the salt project. There's not much of change between what we reported in the first quarter. We have appointed senior process engineer, disciplined interviews have been conducted. We propose to use in-house people. Then we have the draft report, marketing report from GVR. And then the senior management has undergone a presentation with them and then it's going to be finalized very soon. [ FEED ] study is under progress. Consultants have been shortlisted now. We are going to be -- they're going to be appointed anytime soon. So the look-ahead plan is pre-FEED activity will continue, kickoff meeting with geotechnical and topological contractors will happen. We'll be issuing LOA for environment impact analysis and the QRE studies. Finalization of marketing draft report will be done soon. And then the scope of work for third-party consultants for mid-FEED review. So this is an update on the Qatar Salt project. So that's a quick presentation for the first 6 months of 2026. If you have any questions, our CEO will be very happy to answer. So I throw the floor open for any Q&A. That's my presentation. Thank you very much.

Thank you, Surya. Please, the floor is open if there is any questions.

Zuhair, you have raised your hand.

I have got a few questions. One, could you give us an update on the real estate project, the Towers? Where do we stand on the leasing? And how is it progressing? That's one. The second question is on the other income. You mentioned there was a significant increase in the first 6 months, especially in the second quarter. Could you give us some details on that? And how do you see the current -- in the current political -- geopolitical situation, the Q-JET, I'm sure, is not -- has been impacted. How do you see the recovery in Q-JET and its volumes considering the second quarter and moving into the third quarter?

Thank you, Zuhair. I will start with your question about the situation in the [indiscernible] and others. We are working day and night for this one. And just for your information, in the history of Accor, Accor is our operator, by the way. In the history of Accor, they haven't get, I mean, a profit from the first month at certain our project. I mean, when we started, I mean, the project. Then what happens, it happens and then everybody is struggling here and there. Thank God, we got also some customers from -- you remember when the world happens and we stuck -- many people they stuck here and Qatar for the Qatar Airways and for the tourist authority, we gain handle on some people. And of course, we left all of us, we left our office and we stayed turning the bid for all our customers there because we are under their mercy, we are searching for customers. Yes, there is -- as it's happened to all the sector. I mean, the tourist -- it's affected by what's happening. But I will tell you something very very important here. And yes, it is -- I mean, it's affected -- but I believe things coming back. No doubt, you remember we were talking about the first quarter that is different. And we told and I remember in this presentation and everywhere, I keep repeating, if we are going to -- if things happen that things will be solved by end of the -- I mean, the quarter, the first half, then the quarter, the first half then not only QIMCO, the Qatari economy all they will be able to recover, let me say, by the end of the year. But it seems now that it's getting worse than to be honest, I will be more transparent. It is more harmful now for all the economy of Qatar. It is not only the tourist, we are talking about all the economy. And I think here in QIMCO, we have done Syria, you remember, we have done 4 or 3, 4 meeting emergency, and we've done a manual, by the way, for a crisis. And we also -- we tied this manual and we give it to the Chamber of Commerce, we give it to the Ministry, QDB. We gave them this manual because what to do, what kind of action we have to do? What is -- we analyze all the things. We brought all our companies and managers to the table. We've done a questionnaire and based on that questionnaire, we came with a proposed manual. Here, not I'm only answering your question for this one, but it is all for all our business. We are affected everywhere. Here in QIMCO, we have different activities and different for each and you couldn't do the same every -- all the factories or all the companies. We have to treat each and everyone in a different way because we are importing, exporting, we are having a customer in the region. We are having an international customer. We have dangerous [ woods ]. This is another issue. dangerous [ wood ], you couldn't export even with Jeddah, with Sahar, I don't know, they didn't accept dangerous wood to be exported. We stuck with our 165 containers somewhere in [indiscernible] and they brought it back to us, and we have to swallow that one also on our -- that's why it affected our number here for the first quarter -- for first half of the year, this result. Anyway, we put this manual. We updated this also action again and again. I believe that not only for the hotels, I mean, tourist sector only also for other sectors, if the situation will continue, and this is my message, and I have to be transparent. I think we have to change all our strategy as a [ Qatari ] company, as a ministries, as a government, we don't have to ask a government also buy something beyond their capability and capacity. We have to be reasonable when we ask, and that's why we have to go back and work out. We spent our last week with all our companies, and we start we start holding a stick because we have to go back and review our cost optimization. If you are not doing that one, we couldn't get the money from where I can pay the salaries or from where I pay this one for certain companies. But this is what I want to highlight. We are following that one. Alhamdulillah, would thank I mean what we are doing is excellent. I mean, if you go back to our portfolio, you will find our good companies all that we oriented all our -- we concentrate in the companies where the market is there. We have done a good profit. And you can see in the result of those companies, we are doing very good. And yes, of course, others they are affected because they are related, for example, with Qatar Energy. I mean if the charcoal is shut down, what to do? I mean, how to produce heavy-duty plastic bags where it is used only for this purpose, for this to export the petrochemicals. Let me -- yes, of course, we are trying our best also for [indiscernible]. Let me go to this sector. We are working very hard with our operator, Accor [ really ] Swissôtel. We have very good management, and we are doing upgrade for all our facility reviewing our -- we closed some of our restaurants, by the way. And we are modifying this one. We are modifying our -- I will tell you, I will be transparent. We are modifying our menu, our things, our cost, we give so many things to survive. And this is -- by the way, we have a specialized consultant only for this purpose. Those -- they have a very experienced and they are doing a very good survey and they are in the market in Dubai, GCC market, and they know what happened to this one to that one. And we are adapting some of those things based on our evaluation to the situation. This is number one. Number two, for the Q-JET. Number two, I will keep Mazan and he will answer it, but I will go to Q-JET. Q-JET, yes, as you know, Qatar Airways, they closed almost and they affected, but thank god they are coming back now to the stream. Now we don't know any -- Zuhair, we don't know the situation what will happen every day. Now we are -- I will not say we are recorded here. we are now with mercy of this Trump and others and politics situation, you will see because we are afraid, we don't know what to do. Nobody can judge or nobody can know what's going to happen tomorrow. Every day, there is a new announcement. You couldn't, I mean, forecast the coming month, what will be in which direction. Yesterday, we got a good news that Hormoz will not be part bla, bla, bla, it will be open. Next day, they said, no, it is passed and they return it back and you don't know who's your enemy. If this is Iran or American, they return now or I don't know, ship or you know you don't know who's who. And the other one, we are working very closely with shipping company because shipping company, those people, they are the one who's dealing with us and they are the one who is exporting and importing our items. And we are dealing with them closely. We have officers and all our -- we are exporting to more than 100 countries, for your example, all kind of goods. And you imagine we direct some of those other product to land to the other region to the Middle East, to the Saudi, [ Emerald ] with the no. We succeed in this one, but -- and we succeed. We are the first company exporting through Jeddah, by the way. And we're still exporting through Jeddah. We are still utilizing Sahar, Salalah and this one and getting our items and exporting also. We do our best to solve those problems, but there is some items you couldn't help -- what I want to say, Q-JET back to normal since not normal, but they start -- they promise that situation is coming back normal, then 80% other Airways will go operation. Now, the new threat, we don't know maybe tomorrow, they come and they close the airport. You couldn't judge this one how it happens. Now that's why we are here. We don't know how to utilize our vacation, our things, our planning. And this is -- we are doing it. But again, what I want to tell you for the Q-JET, yes, we are back to normal. We are working with our [ oath ] and our operation is -- last week, we have the meeting and our operation handle very good. And if things is okay, by the way... Okay. Number 4, what is it? I forget -- what is -- no, there is no #4. Okay. Just let me go back in general, and this is what I want to mention. So far, I am telling you if things -- if you guarantee that things will go back. Now if you -- if we summarize our problem and the economy of Qatar, that is Hormoz logistics, besides the missiles coming to us, and we are pleasing here and there, we are [indiscernible] it's coming and thank God, our people, they are taking care about this one in a very good manner really. Besides that one, we have logistics problem. If you solve the problem -- logistic problem with Hormoz, then things will come back. And I assure you within -- by end of the year, we will be in very good shape. Everything will go back. And I will not say it will not be affected, but we will be able with a small country like this with a strong economy to swallow the things. But if it just continue more than this, and I think it will be hurting everybody because I felt it myself, to be honest, we are managing our portfolio here and QIMCO and our economy of Qatar, we are following and we are -- I am in so many also other committees here and there trying to arrange many things to -- evaluating the situation. It is really inshallah, I hope that things will be okay. I will go back to Mazen for this point number 2, what you mentioned about.

You asked about the other income, right?

Yes.