Qatar National Cement Company (Q.P.S.C.) (QNCD) Earnings Call Transcript & Summary

Good day, and welcome to the Qatar National Cement, QNCD, Q3 2021 Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Roy Thomas. Please go ahead, sir.

Hello, everyone. This is Roy Thomas from QNB Financial Services. I want to welcome everyone to Qatar National Cement Company's Third Quarter 2021 Financial Results Conference Call. On this call from Qatar National Cement Company, we have Mohammed Al Sulaiti, the General Manager; Sadiq Nimary, the Finance and Admin Manager; and Saqib Parvez, the IR Officer. We will conduct this conference call with management first reviewing the company's results followed by a Q&A. I will turn the call now over to Mohammed Al Sulaiti. Go ahead, Mohammed.

[Foreign Language]

[Interpreted] Ladies and gentlemen, thank you for joining the call and your interest in QNCC. I will start with the details behind the figures mentioned by Mr. Sulaiti. The company's production and sale of cement reached 2 million tonnes compared to 1.3 million tonnes for the same period of previous year, while the production and sales of wash sand jumped to 4.8 million tonnes compared to 3.6 million tonnes for the same period. Also, the management has decided to increase the selling price of cement with effect from September 1, 2021. The increase in the volume of the quantity sold and the increase in the selling price, both of them have contributed to the increase of revenue by 40%. And as Mr. Sulaiti said, the performance during the period was satisfactory, in line with the market demand. If you remember, last year, in quarter 4, the management has decided to reconsider its assumptions about the future use of specifically the remaining useful life of plant 4 and 5. And as a result of the revision of the useful life, a reduction in depreciation compared to same period in previous year estimation amounted to QAR 43 million year-to-year for 9 months, and the difference will be reduced by the end of the year to QAR 27 million year-to-year. And in difference, the lawsuit filed by the Ministry of Municipality and Environment against the company, the outcome of the court verdict related to the case, the company has agreed to settle a sum of QAR 34.5 million in 5 equal installments. The first installment has already been paid. Consequently, the present obligation in this regard has been charged to the statement of profit and loss. With all above facts, the net profit increased to 1 point -- QAR 167 million compared to QAR 81 million for the same period of the previous year. And the main reason was attributed to the higher demand, the cost control and additional other income. Now I will hand over the mic to Mr. Saqib, the Investor Relations Officer, to present and discuss the investor presentation. Thank you.

[Foreign Language] I would like to start with the condensed interim income statement for the 9 months ended September 30, 2021. The sales of the company has reached QAR 607 million as compared to QAR 435 million in the last year, and it witnessed 40% increase during the 9 months period. The cost of sales -- consequently, the cost of sales has jumped to QAR 402 million compared to QAR 354 million in the last period. The gross profit has increased by 154% to QAR 205 million. Other income has witnessed a slight increase of 13%, and it is now stood at QAR 19 million. And there is a onetime legal claim of QAR 34 million and selling price -- selling and distribution expenses witnessed an increase of 146% from the last corresponding 9 months. G&A expenses is almost same. There is no -- there's a slight decrease in the G&A expenses and financial cost has been reduced to 0 due to loan repayment in the last year. The net profit is around QAR 167 million as compared to QAR 81 million in the last 9 months period.

So we can open the question-and-answer.

[Operator Instructions] We will now take our first question from Zohaib Pervez from Al Rayan Investment.

Could you give us [Foreign Language] you have had a very strong cement sales for -- I think the 2 million tonnes sales done for 9 months is equal to the entire year of 2020. Do you see this momentum continuing in for the rest of the year and for next year? Or do you think you will still again need to give some incentives for the sales push? That's my first question. The other question is what kind of projects are leading to the strong demand in cement?

[Foreign Language]

[Interpreted] Yes, the General merger is expecting the same trend will continue for the quantity of cement sales. And for the projects, he is telling that yes, there is projects for the coming period.

Okay. And now that we have -- we are close to the end of the year, any guidance on dividends?

[Foreign Language]

[Interpreted] You can refer this question at the end of the year when the Board will meet to discuss the financial statements for the whole year.

We will now take our next question from [ Mohammed Adil from Alshaya ].

Let me congratulate you on the good results. So I have 2 questions. My first question was on the impact of gas prices on the company operation going forward? And my next question would be I think Pervez asked the same question, but I didn't get it. For next year, what is the company expecting amount for sales? And also, again, because I think by next year, most of the projects will be concluding for the World Cup. After this, what is the company also expecting in 2023?

[Foreign Language]

Is it clear for you or you need translation?

Okay. If I may, to follow up on the gas prices. So the long -- I mean, okay, it's a long-term contracts, QNB didn't try with legal agreement, the contracts up at this high on gas prices? This is my first follow-up. And my second or is also on the contracts. And how -- when does these contracts expire?

Okay. For the gas, we have -- as I told you, we have a long-term agreement with Regas and it is fixed price. And how -- when it will end, it is confidential. Maybe it will be they have agreement with different customers, but all these agreements are confidential.

We will now take our next question from Lee Beswick from QNB.

Can you talk about share buybacks as well as dividends and whether you'd be willing to actually buy back your shares given your cash pile of balance sheet?