Good day, welcome to the Industries Qatar Q1 2021 results conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Bobby Sarkar. Please go ahead, sir. Thanks, Diane. Hi. Hello, everyone. This is Bobby Sarkar, Head of Research at QNB Financial Services. I wanted to welcome everyone to Industries Qatar's first quarter 2021 results conference call. On this call from Qatar Petroleum's Privatized Companies Affairs Group, we have Abdulla Al-Hay, who is the Assistant Manager for Financial Operations, and Riaz Khan, who is the Head of Investor Relations and Communications. As usual, we will conduct this conference with first management and the company's results, followed by a brief Q&A. I would like to now turn the call over to Riaz. Riaz, please go ahead. Thank you, Bobby. Good afternoon, thank you all for joining us. Hope you're all staying safe. Before we go into the business and performance updates, I would like to mention that this call is purely for the investors of IQ, and no media representatives should be participating in this call. Moreover, please note that this call is subject to IQ's disclaimer statements as detailed on slide number two of the IR deck. Moving on to the call on 26th of April, IQ released its results for the 3 months period ended 31st March 2021. Today in this call, we'll go through these results and provide you an update on key financial and operational highlights of IQ. Today on this call, along with me, I have Mr. Abdulla Al-Hay, Assistant Manager of Financial Operations. We have structured our call as follows. At first, I will provide you with a quick insight on IQ's ownership structure, competitive advantages, and overall governance and BoD structure. Secondly, Abdulla will brief you on IQ's key operational financial performance matrix. Later, I will provide you with updates on segmental performance. Finally, we will open the floor for the Q&A session. To start with, as detailed on slide number five of the IR deck, the ownership structure of IQ comprises of Qatar Petroleum with 51% stake, and GRSIA being the second-largest shareholder with more than 21% ownership. As detailed on slide number four, IQ is credit rated by S&P with A+ and Moody's with A1 credit rating with a stable outlook. Qatar Petroleum, being the main shareholder of IQ, provides most of the head office functions through a service level agreement. The operations of IQ group companies are independently managed by its respective Board of Directors along with senior management team. The BoD structure is detailed on slide six of the IR deck. In terms of competitive advantages, as detailed on slide seven, the group is well-positioned with several competitive advantages. It possesses strategically, operationally, as well as financially. These competitive advantages include an efficient and well-maintained asset base, a qualified, highly trained workforce, a sure supply of feedstock and competitively priced energy contracts, lower operating cost, a dedicated marketing team in form of Muntajat to market group's petrochemicals and fertilizer products, and most importantly, a well-experienced senior management team. In terms of governance structure of IQ, you may refer to slides 43 and 44 of the IR deck, which covers various aspects of IQ's code of corporate governance in detail. I will now hand over to Abdulla. Thank you, Riaz. Salam alaikum. Good afternoon, and thank you all for joining us. During the first quarter of 2021, the group benefited from a strong economic recovery, clubbed with supply constraints, resulted in improved price level, which translated into an improved set of financial results. For the three months period ended 31st March 2021, the group recorded a net profit of QAR 1.5 billion as compared to QAR 0.3 billion for Q1 2020, up by 478% as detailed on slide 13. The group's improved financial performance for Q1 2021 versus Q1 2020 was largely attributed to the improved product price, which was on average inclined by 21% compared to Q1 2020 and translated into an increase of QAR 1 billion in the group bottom line earning as you can see on slide 14. Sales volume was also favored by 16% versus Q1 2020, mainly driven by sales volume relating to the Ras Laffan Train 1 to 4 were reported as of Q1 2020 volumes. That was not the case in the Q1 2020 as Ras Laffan was operating under temporary gas processing arrangement and did not recognize sales volume in relation to Ras Laffan Trains 1 to 4 for the first seven months of the financial year 2020. Nevertheless, the improvement in the sales volume was offset to an extent by the reduction of volume during Q1 2020 due to the mothballing of a steel facility, commercial shutdown and fuel additive facility and the planned shutdown of certain facilities and fertilizer segment. As you can see on slide 14, the overall growth and sales volume contributed by QAR 200 million positively to the current period bottom-line earning versus Q1 2020. The overall growth in selling price and sales volume led to an overall growth in revenue for the group, which increased by 28% in Q1 2021 versus Q1 2020 to reach QAR 4.2 billion. As detailed on slide 12, the group production levels were down on Q1 2021 by 20%. This decline was mainly attributed to the malfunctioning of certain steel facilities which were started since mid-2020. Periodic maintenance shutdown at certain QAFCO facility, Train 1 to 4, and commercial shutdown at MTBE facility. Moving on quarter-on-quarter performance, compared to the fourth quarter of 2020, the group revenue improved by 27%, while net profit improved by 43%. The key contributor towards the growth was the overall increase in average selling price, which continued its positive trajectory on the back of improved macroeconomic sentiment and supply challenges. Selling price increased by 27% in Q1 2020 versus Q4 '20. Sales volume, on the other hand, remained flat versus last quarter. Our robust business model and the strength of our global supply chain continued to leverage our resilience and provided flexibility to our operations, whereas our continued positive of being a low-cost operator ensured our competitive edge and aided to generate one of the strongest quarterly performance over the last five years. Moreover, as detailed on slide number 16, IQ's EBITDA margin continued remained robust. This is testament to the group cost management and cash conservation capabilities with an ability to maintain its cash flow despite volatile current and commodity prices. We continued to build our strong financial positions with improved cash flow generation capability, and the group generated QAR 1.8 billion in term of free cash flow for the quarter one 2021, as detailed on slide number 15 of the IR deck. On overall basis, our base case strategy will continue to focus on market development, focusing on capturing new markets, creating market arbitrages, and bring logistic cost saving to the group. We will also continue to focus on productivity and efficiency gains via ongoing cost optimization program. I will now hand over to Riaz to cover the segmental performance. Thank you, Abdulla. I will start with petrochemical segment as detailed on slide 24. Performance of the petchem segment improved with a net profit of $608 million for Q1 '21, with an increase of almost 400% versus Q1 '20. This notable increase in profits was primarily driven by improved product prices on the back of improved demand for petrochemical products due to better macroeconomic conditions while supply remained constrained throughout the period. Segment's blended product prices rose by 41% versus Q1 '20, while sales volumes were marginally up by 2% compared to the same period last year. The growth in product prices, coupled with sales volumes, led to an overall rise in revenues by 45% within the segment to reach QAR 1.4 billion for the current period. Production volumes were up on Q1 '20 as the segment had higher operating days during the current quarter compared to that of the last year's. As detailed on slide 25, segment's EBITDA margins continued to remain on a positive trajectory. In terms of segment revenue by geography, as detailed on slide 25, Asia remains the main market for PE and MTBE, whereas Indian subcontinent remains a key market for methanol and PE. Moving on to the fertilizers segment, as detailed on slide 30. The segment reported a net profit of QAR 595 million for Q1 '21 with more than 200% increase versus last year. This increase was mainly driven by growth in revenues, which increased by 55% in the current quarter versus last year to reach QAR 1.6 billion. Selling prices also improved by 39% versus Q1 '20, which reflected positively on the segmental performance. Sales volumes increased by 55% in comparison to Q1 2020. On the other hand, production volumes within the segment were down by 10% versus Q1 2020 as QAFCO trains one to four underwent higher number of days of maintenance shutdowns during the period as compared to the same period last year. As detailed on slide 31, segment's EBITDA margins continued to remain robust. In terms of segment revenue by geography, as detailed on slide 32, North and South Americas remains main market for fertilizer segment, along with Indian subcontinent and Asia. During the quarter, the steel segment continued its profit-making trajectory after having a difficult first half of 2020 and following the strategic restructuring initiatives implemented. The net profit for the current period amounted to QAR 259 million versus a net loss of QAR 88 million in Q1 2020. On overall basis, segmental revenues was moderately down by 6%, mainly on the back of decline in sales volumes, which declined by 23% due to management's decision to mothball certain steel facilities. On the other hand, selling prices improved by 20% during the current period versus Q1 2020 due to increase in demand along with higher raw material costs internationally. Mothballing of certain steel facilities along with the segments allowed the segment to primarily focus on profitable domestic market, which led to adjust its cost base. Moreover, due to improvement in international prices, the segment was also able to sell some of the quantities outside the domestic market. Furthermore, by changing raw material mix, the segment reduced its cost without affecting the quality of the final product. All of this led to a strong sequential recovery in EBITDA margins as detailed on slide 37. Now we will open the floor for the Q&A session. Thank you. Ladies and gentlemen, if you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Once again, press star one to ask a question. We will take our first question from Bilal Sabbah with Jadwa Investment. Please go ahead. Your line is open. Yes. Hi. Thank you for the call and for the feedback, and congratulations on a strong set of results. I was wondering if you can give us a bit more clarity on the steel segment. Was there steel being sold to international markets? What's the current difference between international prices versus local? Does the current environment making you consider recommissioning the mothballed plant? Okay. You want to ask another question or this is your only question? One more question, please. If you can give some feedback on the specific shutdowns that happened during the quarter, specifically in which segments or trains did it happen. Is there any update on the shutdown plans for the remainder of the year? Thanks. Regarding the steel segment, as you are aware, we have taken the decision last year to mothball our facility and to focus on only local sales. To be honest, this position was a really excellent position where we have shifted our unit from making losses to a unit that generates profits. Selling on a local price right now, this is what we are looking for. During the last two months of the Q1, we have seen also an improvement of the steel price in the GCC countries. We have sold some of our products in the Kuwait and in Oman, where the pricing was attractive. Our main focus in local prices. Our local prices was much more better than the international prices. Right now, with the improvement and the growth in the macro economy, we started to have very competitive price with the international prices, which is also improved by 20%, as we have shown in our presentation, where also the prices in the GCC countries improved as well. We have sold some of our steel products to Kuwait and Oman. I hope I have answered your question regarding to the steel. You have the second part, if we are going to go back to a full capacity, maybe. Right now, at this time and at this stage, we are not looking to go for a full capacity until we have a clarity on the macroeconomic situation. Still, there is uncertainty with what's ongoing on in regard to the COVID situation. We see there is a growth. We see there is some of the potential projects happening in Saudi Arabia. We are willing to cater their need as well. If we see there is an opportunity to go back to a full capacity, we are not going to stop it. We're going to go. We need to make sure our decision is on a basis. We don't want to hurry right now to take the decision when something is happening which lead to change the macro economy. Right now, we are satisfied with the results that came from the steel segment, we reported an excellent positive number, and we are catering all the local sales. Okay? I hope it is clear to you. I don't know if you want to ask further questions on steel. No, thank you. Okay. We can move to the maintenance shutdowns, please. This time we have a planned shutdown in fertilizers segment due to the normal routine maintenance activity in the train one to four only. This is a planned one. We are doing the planned shutdown on regular basis. If you want, I have some of the information related to the even future quarters. We're going to continue having a shutdown during Q2, Q3, and Q4. However, major of the shutdown going to be happening during Q1 and Q4. Q4 going to be exactly on the same level of Q1 shutdown. It's only 38 days in ammonia facility and 34 days in urea facility. TotalEnergies plant shutdown for both facility, around 210 days, which is not much to burden us. If you look at QAFAC, for example, the fuel additives, we are conducting a shutdown on MTBE facility due to the commercial requirement, where we don't see that the MTBE prices are very low. We took the decision to stop producing the MTBE, just to avoid any losses in the QAFAC. If you compare QAFAC or the fuel additives performance compared to last quarter, also, we are much more improving our performance compared to last year. This is all what I have in terms of shutdown and fertilizer and fuel additives. Okay, thank you. No shutdown plans for the petchem segment? There is a planned shutdown in petchem. Very minimal during Q1. We have also a shutdown in the next four quarters, all planned shutdown related to maintenance. TotalEnergies shutdown will be around 300 days for different facilities in total of shutdowns, which is again, mainly to the routine maintenance. However, during Q1, we have only about 27 days of planned shutdown with zero unplanned shutdown. Sorry. Could you repeat that? How many days were in Q1 and how much was the total for the year? For total for the year, around 300 days. Q1, right now we have about 27 days or 28 days. You know, number of days here, based on facility, like each facility has where each, like petrochemical, they have many trains. Each train, we calculated their shutdown on that basis. Collectively. Perfect. Thank you so much. Welcome. We will now take the next question from Muneeb Butt with Axiom. Please go ahead. Your line is open. Hi. Thank you for the opportunity. I have three questions. The first is with regards to the gas price structure. I believe as per the new agreement, what are the terms of the gas prices which IQ will receive and what could be the expected impact on the margins? My another question is with regards to the, is there any update on the 20% stake buyout of QAPCO? Any color on that? My last question is with regards to the future outlook in terms of product demand. Right now, India and the other subcontinent is facing COVID issues. Do you foresee any slowdown in the demand, at least in the near term? Okay. Thank you. Regarding the gas price structure, I believe in each and every earning call, we have the same question. Our gas price structure is the same. We have a fixed number, and we have a formula that links to the final product price. Fixed plus the variable, which is linked to the final product price. If the price is going up, it will go up as the price is going down. It will go down. There is a cap in the up and down terms. What is the expected improvement or impact based on the new gas treatment? As you can see, we have an excellent arrangement right now when we renewed the gas agreement regarding to fertilizer, our margin improved. Basically, we have an excellent rate right now. Regarding the 20% of QAPCO, to be honest, as we have highlighted before, we have the appetite to look at the investment. However, nothing happened. Still, we have Total as a shareholder. We don't have any information if Total going to continue after the ending of the JVA, which is happening in 2024. Or maybe Qatar Petroleum may take this stake, or we don't know if it's going to be offered for sale. However, if this 20% is going to be offered for sale, we will be interested into that. Future outlook on demand, I can see that there is a demand. We know the impact of COVID is there. However, the real impact already happened in 2020. Right now, all the business units, all the governmental, they started to know how to deal with this pandemic. I believe there is a demand. This will not stop our operation. This will not stop the demand. I believe there is a strong demand as well in all of our segments. Okay. That's it from my side. Thank you. Okay. Thank you. Again, as a reminder, to ask a question, press star one. We will now take our next question from Faisal Aslam with Goldman Sachs. Please go ahead, your line is open. Yes, hi, good afternoon to everyone on the call. Ramadan Kareem to everyone, congratulations on the numbers. Just two questions on my end. The first relates to the payout structure. When looking at the payout structure from last year and the year before, it's been quite high. Should we expect that trend to continue this year given where earnings are? You've had quite a leap in Q1 numbers, so far, indications are that net income will be substantially higher than last year. Should we think about that high payout ratio as something that can be expected this year? My second question relates to CapEx. When looking at Q1 CapEx, if you annualize the numbers, it's well below the budgeted CapEx for the year. Does that mean that you're achieving lower than expected CapEx, or should we expect more of that later on in the year? Thank you. Okay. Thank you, Faisal. Happy Ramadan to you. First question regarding the payout ratios. It's all dependent on the performance. We are still in the first quarter. We see a good result. Also, we see that there is an improvement in the price. I understand 2020, IQ was very generous. Just we paid you 100% of our earning. This was for the first time for IQ to pay 100% of their earnings. To be honest, this position, it came on the time of when the Board was meeting. They will make the decision based on the market, based on the macroeconomic as well. I cannot comment on any percentage in this regard. What can I comment on? That IQ always looking to increase the value for their shareholder. IQ always looking to take the best position for their shareholders. Regarding the Q1 CapEx, the way we have presented here, when we budget for all our CapEx requirement, we just take the cost of CapEx, and we just divide it based on 12 months. Maybe there is a capital expenditure that may happen in the Q1, Q3, or Q4. Their cost is then allocated during the full year just for reporting purposes. There is no CapEx that's been deferred or any. Everything as per the plan. Thank you. Welcome, Faisal. There are no further questions at this time, I would like to turn the conference back to our speakers for any additional or closing remarks. Hi, guys. This is Bobby again. If there are no further questions, I just want to jump in with one question of my own, if I may. Can you just go over in the steel segment, I see a significant uptick in volume on a quarter-over-quarter basis. What was the reason behind the significant 70%, 80% increase in sales volume from 4Q to 1Q? The EBITDA margins are extremely strong. Do you expect a similar trend in EBITDA margins for the rest of the year? Is this a sustainable EBITDA margin, is what I'm trying to ask, for the steel segment? Thank you. You are talking about the sales volume and the improvement in sales volume. As you are aware, last year we have different gas processing agreement for the fertilizer segment. This time, we have a new gas arrangement. We started to book our sale and fertilizer. This is the difference. Last year, we were not reporting the sales for fertilizer since the QAFCO were acting as an agent for QP, where there is now a different arrangement. This time, we have a new gas processing agreement, where we have recorded for the sales. No. Okay. Sorry. Just a clarification. You are talking about the fertilizer or which segment? No, I was talking about steel. Steel sales volumes are up- Steel 76% quarter-over-quarter. Yes, please. Okay. Steel sales segment quarter-over-quarter. Let me look at it. From where you get this information from? Okay. It is 76% from Q4 2020. Yes. One of the chunk, which I can just add, and Abdulla will also confirm this point, that when we were talking about, there is some international sales have been made. That was some portions which was there in the inventories, which we sold. That was not only on the rebar side, which is our main product. It was in addition to rebars. We sold DRIs and some billets also. That also get added in the math from the math perspective to your sales volumes. All in all, that is why you see a significant increase in the sales volume number. Okay, great. Just to follow up. The EBITDA margin 24% for this quarter, is this something you think it is sustainable considering the level of prices and iron ore prices? Is this something that we can consider as a base or something to work off? Thank you. That will first depend on the final product price. As you are aware, our production are very lean. We are optimizing all our costs. If the product price are improving, we will be maintaining the same level of EBITDA or more. If the prices going down, we will be having a pressure on the EBITDA. However, we see that the prices will maintain at the same level for the next quarter. Okay, great. Thank you. Diane, are there any further questions? No, there are no further questions over the phone. Hello? Yeah. Hello. Yes, hi. Hello. If there are no further questions, this is Bobby again. If there's no further questions, we can stop the call for this quarter at this time. I want to thank Abdulla. I want to thank Riaz for taking the time to answer our questions, and we will pick up this again next quarter. Thank you so much. Thank you. Thank you all. Thank you for joining us. Thank you all. This concludes today's call. Thank you for your participation. You may now disconnect.