Good day. Welcome to the Industries Qatar Q1 2022 Results Conference Call. Today's conference is being recorded. At this time, I'd like to hand the call over to Bobby Sarkar. Please go ahead, sir. Thank you. Hi. Hello, everyone. This is Bobby Sarkar, Head of Research at QNB Financial Services. I want to welcome everyone to Industries Qatar's first quarter 2022 results conference call. On this call from QatarEnergy's Privatized Companies Affairs Group, we have Mohammed Al-Sulaiti, who is the Manager in Privatized Companies Affairs. We have Abdulla Al-Hay, who is Assistant Manager in Financial Operations, and we have Riaz Khan, who is the Head of Investor Relations and Communications. We will conduct this conference with first management reviewing the company's results, followed by a Q&A. I would like to turn the call over now to Riaz. Riaz, please go ahead. Thank you, Bobby. Good afternoon. Thank you all for joining us. Hope you're all doing great. Before we go into the business and performance updates of IQ, I would like to mention that this call is purely for the investors of IQ, and no media representatives should be attending 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 25th April, that is yesterday, IQ published its reserves for the three-month period ended 31st of March 2022. Today in this call, we'll go through these results and provide you an update on key financial and operational highlights. We have structured our call as follows. At first, I will provide you with a quick insight on IQ's ownership structure, its competitive advantages, and overall governance structure. Secondly, Abdulla will brief you on IQ's key operational and financial performance metrics. Later, I will provide you with an update on latest segmental performance. Finally, we will open the floor for the Q&A session. To start with, as detailed on slide five, the ownership structure of IQ comprises of QatarEnergy with 51% stake, and the rest is in the free float held by various domestic and international corporates and individuals. IQ is credit rated by S&P with A+ and Moody's with A1 credit rating with a stable outlook. QatarEnergy, 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. In terms of competitive strengths, as detailed on slide eight, the Group is well-positioned with several competitive advantages it possesses strategically, operationally, as well as financially. These strengths includes an efficient and well-maintained asset base, a qualified and highly trained workforce, a secure feedstock supply and competitively priced energy contracts, lower operating cost, a dedicated marketing team in form of Muntajat to market Group's petrochemicals and fertilizer products, Most importantly, a well-experienced senior management team. As detailed on slide 10, from competitive positioning perspective, IQ ranks amongst top-tier companies within the region downstream space across most of the metrics. In terms of governance structure of IQ, you may refer to slides 48 and 49 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. [Foreign language] Good afternoon, and thank you all for joining us. Starting with macroeconomic environment, which remained uneven during the first three months of 2022, where demand for most of the downstream products slightly inched down. As a buyer remained cautious, hoping for lower price after reaching its peak last year. Seasonal effect weighed on most of commodities demand, mainly during the early part of the year. Especially during the late part of the first quarter 2022, supply side was affected by amid Russian-Ukrainian conflict and forcing a sharp rise in energy prices. The financial performance for the first three months of 2022, as detailed on slide number 16 of the IR deck, the Group reported a net profit of QAR 2.7 billion, as compared to a net profit of QAR 1.5 billion for the same period of last year, as reported a growth of 87%. Group's improved financial performance on a year-on-year basis was largely attributed to the improved product price, which was on average inclined by 55%, and translated into an increase of QAR 2.8 billion in the Group's bottom line earning, as you can see in slide number 17. Sales volume increased by 9% versus the first quarter of 2021, primarily driven by higher plant operation rates, leading to improved production volume and contributed QAR 409 million positively to the current period bottom line earning versus the first quarter of 2021. The overall growth in selling price and sales volume led to an overall growth in revenue for the Group, which increased by 69% during the first three months of 2022 to reach QAR 7.1 billion. As detailed on slide number 15, the Group production levels were up on last year by 5%. Growth and production volume was mainly driven by multiple factors, including the Group's recent decision to restart one of the previously mothballed DR2 facilities with a larger capacity, while mothballing previously operational DR1 facility, having a lower capacity. Additionally, the Group had higher number of operating days during first quarter 2022 compared to the first quarter of 2021, as there were relatively lower number of planned and unplanned shutdowns reported during the current period. Quarter-on-quarter performance compared to the fourth quarter of 2021. Group revenue and net profit improved, mainly linked to better sales volume due to higher production, together with additional sales volume from QAFCO on account of timing of shipments carried forward from the fourth quarter of 2021. Sales volume increased by 25% on a quarter-on-quarter basis. On the contrary, the product price declined during the first quarter of 2022 by 5% versus the fourth quarter of 2021 amid volatile macro trends. 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 positioning of being a low-cost operator ensured our competitive edge. Moreover, as detailed on slide number 19, IQ's EBITDA margin continued to remain robust. We continued to build our strong financial position with improved cash flow generation capabilities, and the group generated QAR 2.6 billion in terms of free cash flow during the current period, as detailed on slide number 18. I will now hand over to Mr. Riaz to cover the segmental performance. Thank you, Abdullah. I will start with the Petrochemicals Segment as detailed on slide 25. Performance of the Petchem Segment improved with a net profit of QAR 673 million for the current period, with an increase of 11% versus the same period of last year. This increase was primarily linked to improved product prices owing to better macroeconomic dynamics. The performance of the segment was also aided by higher production volumes as the segment's fuel additive operations were on a commercial shutdown during first quarter of 2021. This was partially offset by slightly lower production volumes from polyethylene facilities. Segment's blended product prices rose by 18% on a year-on-year basis, while sales volumes increased by 13%. Segmental revenue for the period reached QAR 1.8 billion, with an improvement of 33% versus the same period of last year. As detailed on slide 26, segment's EBITDA margins continued to remain strong. In terms of segment revenue by geography, as detailed on slide 27, Asia remains the main market for PE and MTBE, whereas the Indian Subcontinent remains a key market for methanol and PE products. Moving on to the Fertilizers Segment, as detailed on slide 31. The segment reported a net profit of QAR 1.7 billion for the current financial period, with an increase of 194% versus same period of last year. This increase was mainly driven by growth in revenues, which increased by 147% to reach QAR 4 billion. Selling prices improved by 113% versus same period last year, while sales volumes increased by 16%. On the other hand, production volumes remained flat versus last year. As detailed on slide 32, segment's EBITDA margins continued to remain robust. In terms of segment revenue by geography, as detailed on slide 33, North and South Americas remain main market for the fertilizers, along with Indian subcontinent and Asia. Let's discuss the steel segment, and you may refer to slides 35-40. The steel segment reported a revenue of QAR 1.3 billion and a net profit of QAR 261 million, moderately up by 6% and 1%, respectively, versus first quarter of 2021. On overall basis, segmental revenue was up by 6%, mainly on the back of increasing selling prices, which increased by 18% on a year-on-year basis. The growth in selling prices was partially offset by a decline in sales volumes, which declined by 10%. As stated earlier, starting from this year, the segment restarted its DR2 facilities as against the DR1, which was operational until the end of 2021. DR2 has a production capacity of 1.5 million metric tons per annum, compared to DR1 that has an annual capacity of 800,000 metric tons per annum. Switch and mothballing of facilities would provide an opportunity of approximately 400,000 metric tons of DR per annum to be sold directly in the market. Moving on to the slide 38. Segment EBITDA margins continue to remain robust following the mothballing decision. We will open the floor for the Q&A session. Thank you. Ladies and gentlemen, if you wish to ask a question at this time, please signal by pressing star one on your telephone keypad. Hi, this is Bobby Sarkar again. While we are waiting for questions from other analysts and investors, maybe I can get started with a couple of my own. On fertilizers, I just had a question that, given the trajectory of prices that I see in the first quarter, considering that you had shipments delayed or pushed forward from the fourth quarter to the first quarter, I would have thought you would have had stronger sequential urea price realizations in the first quarter versus the fourth quarter. I see that it's actually down 14% quarter-over-quarter. Can you please let us know why your realization actually went down in the first quarter versus the fourth quarter? If you can share what the outlook is for urea in the near term. Secondly, for steel, I see the swapping of DR2 versus DR1. Could you let us know what is the rationale behind this when we can start seeing DR sales hit your top and bottom lines? Finally, again, on steel, given that we're anticipating the World Cup in November, December, would you expect a general slowdown in construction in Qatar toward the second half of this year? How will that impact your steel business? Thank you so much. Bobby, to answer your question, what happened, the urea prices increased significantly during the fourth quarter. What happened, the buyers pulled back or slowed down because the prices have reached a very high level. The buyers have pulled back during early part of January and first half of February. Prices started to slow down during January and February. That average impact slowed down the prices. The prices started to increase after the conflict between Ukraine and Russia in March. The overall impact for the Q1 was lower than the impact for the overall pricing of Q4. The second point is because the overall price of Q4 is higher and because you sold part of your Q4 inventory in Q1, obviously if you are carrying forward expensive inventory into your Q1, your operating cost also will be higher. That is the answer to your question related to fertilizer. Coming back to the question on steel, the first part, the rationale for moving into DR. There are a couple of reasons. The reason number one, DR2, now the market looks, regionally there are demand for DR. That is one reason. Number two, we have the metallic facility which produces the EAF5, which produces billets. That facility has a capacity of 1.1 million, whereas our DR2 or DR1 facility produces DR of approximately 800,000. To feed the EAF5, what we do, the balance was compensated by, we purchase scrap from the market, around 300,000 to 350,000 scrap. What is happening currently, there is a shortage of scrap in the market. If we operate only the DR1 facility, we cannot operate the EAF5 or the steel melt shop at 100% capacity. To balance that, we open the DR2 that produces 1.5 million metric tons of DR. You give 1.1 to your SMS or the EAF5, the balance 400,000 you sell directly in the market, and there is a reasonable demand in the region for that as well. The third question about the demand following the World Cup, that everybody knows we will find buyers in the regional market for any excess production, and which we are doing right now as well. We sell a reasonable quantity in the regional markets and the international market as well. Hope I answered all 3 of your questions. Yeah. Thanks, Safan. That's clear. Just to follow up on the fertilizers. Is just the carrying forward of the higher price inventory responsible for the significant decline in EBITDA margins from the fourth quarter to the first quarter? I see from 68% to 50%. Is there something else going on there? Thank you. Yeah. Basically, it's a function of your, you see your Q4 prices are very high, and your feedstock price has an element linked to your product prices also. When you value your inventory, which is also a function of your feedstock prices. You carry it forward, your inventory which is priced linked to your high-priced stocks as well. When it moved into your Q1, obviously it has an impact as well. It's obviously linked to your Q4, which your average urea was around QAR 700. Obviously, that is moving into your Q1. Obviously, that becomes your opening balance. That has an impact on EBITDA margin. Okay. All right. Great. Thanks. Operator, can we open it up for outside calls, please? Thank you. Sure. First telephone call, question from Faisal Azme from Goldman Sachs. Please go ahead. Yes. Hi, thanks for the opportunity to ask questions. Maybe just to follow up on the steel switch and operations. Just how should we think about margins going forward? Has the impact from the transition been realized in terms of the impact on margins? How should we think about the actual sellable volumes from the transition when we think about the next few quarters? Have you reached what you need to reach in terms of production and volume sold? That's my first question. Or should we still see some form of a higher impact in Q2? Would you have higher overhead costs by any chance because of that transition as well? That's my question on the steel segment. Maybe just following up on the fertilizer one as well, just to get a better sense of how should we think about Q2. Obviously you've had also prices increase quite meaningfully in March. I guess the question that I have is probably, I'm assuming from a seasonality perspective, you'd have more volume sold into Q2. If prices fall again or normalize lower in the second quarter, will you have another margin compression? Or should we expect margins to improve from here on into the second quarter? That's my second question. Finally, just on the expansion, or the QAFCO 7, if you have any updates on that would be helpful. Thank you. Faisal, to answer your question, I'll go back, start from your steel question. Steel DR2, basically it was started on January 7th, a week before our official launch, official plan start date. We started a week before the planned restart. There were a couple of shipments that were included in the Q1 result. Basically, the annual capacity, the added sales that was included in our 2022 business plan was around approximately 400,000 metric tons. Part of those for Q1, some numbers were included. We are expect to achieve the full budget for the year if everything goes as expected. Your question whether are we going to include any significant overhead increase for this? We don't think so, because the facility was kept on warm status. Operating or restarting a warm status facility, you don't incur large operating costs to restart those facilities. Other thing is, this facility, DR2 facility, is a newer facility compared to the DR1 facility. It has the capacity to produce a product called HBI, which has, how do I say? A little better product than DRI, and it can be sold at a slightly better margin, and it could be transport easily also and gives you little better margin as well. We are going to ship one of those shipments shortly as well. That will give you a slightly better margin. In terms of margin management also, DR2 will provide slightly better margin. The plant is running. Part of the shipments revenue has been recognized in Q1. We are expecting to sell, or we are expecting to recognize or expected to operate the plant as per the plan for we expected in our business plan. Operating cost is not huge. Only thing is, originally when we were running DR1, we were planning to use a mix of scrap plus DRI, but here the use of scrap has been reduced because of the scrap shortage. DR2, when it's moving into from DR2, EAF for this SMS, the use of scrap is reduced whereas we use more DR. That is to answer your question related to steel operations. To answer your question about fertilizer. Q1, we had an operating cost impact because we are holding high priced inventory coming from Q4. Q1 prices were also expensive, but we sold most of the inventory in Q1. If you look at the sales volume of fertilizer volume sold in Q1 were high. If you remove the inventory impact of Q4, the production of Q1 and the sales volume of Q1 remained relatively the same. Therefore, there were no major inventory movement within the quarter. Which means, there were no effect of inventory coming from that quarter, all but came from the previous quarter. What is moving into Q4, your opening balance of QAFCO inventory probably would be very negligible. Any price movement of going into your feedstock probably should be from that quarter's price movement. Obviously any large price movement coming from the previous quarters may not have an impact. Again, price movement positive will have an impact on your feedstock operating cost positively, and the reduction in your prices will also have the impact the other way. Both ways it will have impact on your overall margins. The margins are relatively sustainable, and as you see, historic margins at IQ level remains relatively stronger compared to the regional peers. All our metrics as shown in one of our slides, we effectively remains stronger compared to other peers in all metrics. I hope answered all your three question, I think. Did I answer all three? Yeah. There's the QAFCO 7 question. Yeah. QAFCO 7, as of now, as per the latest information we have, we are on track as per the initial announcement we made. Any updates, we will make an announcement no sooner we get a firm decision from the board. If you don't mind me asking just a follow-up question, or an additional question. When looking at your petrochemicals business, we're just trying to get a sense of how the EBITDA has kind of been moving. When you look at Q1 numbers, you compare it to Q3 of last year, in terms of the average level of product prices, it's higher on the petrochemical side for both the polymers and methanol and MTBE. When you look at volumes as well, they're higher across the board. Your EBITDA is pretty much flat with Q3. Is there an impact on the feedstock cost that's driven by global energy prices that we need to factor in, and that's why the margin movement is relatively muted? Or is the feedstock pricing mechanism largely linked to the end product? Why hasn't margins improved when you compare them to Q3? It is also the same concept applies. The feedstock prices are linked to the same basis like fertilizer. You have a base, an indexation to end product prices. In this case, it is indexed to the LDPE prices. When the LDPE prices goes high, you have the operating cost increases. Also depending on the basket size, how big your LDPE sales volume. In Q3 last year, probably there could have been more LLDPE sales compared to more LDPE sales. Depending on how big the basket is, your composition might change and the overall margins could change. Thank you. The next question comes from Alex Comer, from JP Morgan. Hi, guys. I don't want to sort of dwell on this, but just to go back to this margin issue in the fertilizer business, which you've said is down to the stock moves. Obviously, there was a big working capital release as well, so I assume that that's related to that as well. You've also just mentioned about the linkage between feedstock prices and end selling prices. Maybe you could help us out here. Because obviously what we're trying to ascertain is, how much gearing you have to rising and selling prices. Are we talking about the gas price going from, sort of $2.50 in MMBtu to three or four or five? Is that what we need to think in here, or is it more than that? Can you confirm the margins in the fertilizer business are much more dependent on this stocking issue than the feedstock issue? That's the first question. The second question is, I notice a very sort of significant change in your sales patterns in the fertilizer business, from sort of North America towards Asia. Just wondering what brought that about, and South America as well. What brought that switch from the Americas to Asia about, and how has that impacted your end selling prices? Thanks. Yes, Alex, this is Abdullah. Related to the margin, as we just highlighted by Safwan, that we have an element that's linked to the final product price. The formulas work on the basis of the average year to date of sales of that, of a product. The average for the first quarter is much more higher than the average for the full year. This is why you see the impact on the feedstock is higher from the last year. This is an additional point to what Safwan already highlighted. Related to your second part, for the geographic sales, basically we are targeting always a better margins. This is an arbitrage opportunities, where we see a better margin in different region. We targeted that region. Of course, it will impact positively to our performance. Muntaj always look at the most. Sometimes, the sales blend have forward sales and spot sales. If they find the spots are better in some other markets, they always can move shipments based on arbitraging opportunities. That's why this time probably the sales are moved towards Asia. Just back to this margin issue. When we're looking at the gas price increase from a feedstock perspective, based on the end selling price, are you saying that the quarterly move in the gas price, for instance, in the fertilizer business in Q1 2022 is based on the difference between the selling price in Q1 2022 and Q1 2021? Because obviously there wasn't a big increase. Well, in fact, the urea price went down from Q4 to Q1. The question is, did the gas price, in your feedstock, move up or down versus the Q4 position? Hi, Alex, Riaz here. We need to understand one thing that how the end product pricing affects on the feedstock price. What happens is, every start of the year, you start taking the urea price and keep on taking the average of it, starting from the 1st January. In the last year, the urea prices started to jump significantly in Q4. Okay? The averages of the urea was significantly lower compared to the year-end prices of urea. Now, since we started a new year, the formula is taking the prices again from the 1st of January for urea. You got a newer base, you got a new high on the urea prices. That is actually affecting the feedstock end product indexation. Is there any way you can give us some guidance on what that is, the feedstock? I mean, is it twice what it was this time last year? Is it three times? What is it? Unfortunately, it's a commercial agreement between QAFCO and QatarEnergy's commercial department. We don't have any right to give further nitty-gritty. Only three things we can say. There's a base price. There is a CPI added to that, plus there is an indexation. The indexation works when urea price increases, the benefit is shared between QAFCO/IQ and QatarEnergy in proportions. You can't give us any more. If it's just the urea price doubles, does the gas price double or not? Is it not as direct as that? That is, unfortunately, even we have not seen the written gas price contract, unfortunately. Even, Alex, mathematically, if we talk practically and we say how the pricing moves, if you are getting a newer base, which is basically the high urea price, right now we are somewhere at $700, $800 per metric ton. The year-to-date average is starting from 1st of January versus the last full year average was somewhere $450-$500. Again, you can understand mathematically you will get a bump on your feedstock cost because the average formula You got the point. I understand the point. What I'm trying to work out is how much is due to this inventory carrying and how much is due to the gas price increase. Obviously, you've seen your margin drop from sort of 70%-50%, and what we're trying to work out is, do we go back to 70% for the next quarter or are we stuck at 50%? I'm assuming that the larger quantum is coming from the inventory carrying, but I'm just trying to make sure that I can at least make some sort of sensible guess here for my model. Yes, Alex, you will see this correction will happen during the year. Just follow us in the couple next quarter, and maybe you can identify through your own analysis and calculation the impact. We cannot go any further from this. You also can look at the segmental reporting. There are certain line items you can remove it, and you can get into some backward calculation. That's what I think maximum we can do. Unfortunately, it's a very sensitive contract. Even we don't see the written contract, unfortunately. The IQ, QatarEnergy and QAFCO, it's a very tight, closed type contract. Okay. All right. Thanks for your help, guys. Shashank Lanka from Bank of America, please go ahead. Yes. Thank you very much for the presentation and the opportunity to ask questions. Just on the fertilizer segment, when I look at your average prices for the quarter, I think you mentioned around QAR 670 per ton in Q1. We normally track our Bloomberg tickers, but the average I see is about QAR 800, QAR 820. I'm trying to understand the reason for such a big difference, right? Because we also saw this in the last quarter, and this was not something that was seen previously. Can you give us some guidance on what's driving that? Are we seeing the wrong ticker for your company? Okay. Shashank, you're asking petchem, right? No, for urea pricing. Urea pricing. Okay, sorry. Okay. Shashank, you need to get one point, that Bloomberg prices, firstly, they are based on the market reports, the reports or the numbers which we disclose. We heavily caveat ourselves that when you look at the Bloomberg numbers, obviously you will see a discord, but the discord is not that significant. The direction will remain the same. Either it's balanced, either it's bearish or it's bullish. In terms of matching the exact number, let's say I'm reporting an average selling price for my fertilizer business of QAR 695. Okay? That QAR 695 cannot be 100% matching to the average of the Bloomberg, because these are the prices which have actually been realized in the market. By the way, if you go on slide number 34, you will see the breakdown between the urea and the ammonia also. Because the price at the segmental level, you see it including both the products, and then we are bifurcating those products on slide 34 by showing you urea and ammonia separately also. Again, in all cases, we cannot say that there is 100% match between the Bloomberg prices and the prices which is getting realized by actual commercial transactions. Indeed, the directions will be same, the trends will be same, and that was the idea to show it on the macroeconomic slides, these prices, that there is a trend going on, that the trend can be matched, but actual realized prices for sure will be different. One more thing. Say, when they report the prices, it could be, say for example, a particular ticker, for example, Black Sea or Arabian Gulf. Our prices are basically the blended number that comes to us. Our price is a basket of prices that's realized at QAPCO. The actual invoices which is getting issued to them. Actual invoices divided by the number of units sold. Whereas Bloomberg could be a ticker. It could be Arabian Gulf, it could be Black Sea, it could be another ticker. Okay. Basically, the pricing mechanism has not changed versus what you did in the past at all. It remains the same. Yes. Basically, the FOB realized price booked in QAPCO's financials. Okay. The second question I had was on your steel business, this DR2 unit which you started. You said you're mixing lesser scrap to produce steel, but I was just wondering, how is that going to impact your margins? I mean, buying scrap in the market is cheaper than increasing operating rates of DR2, right? Is that understanding correct? The point is, the scrap is also becoming less available, the prices are increasing. The second point is, if you operate DR1, the EAF5 plant, the SMS melt shop partly will become less underutilized. You are not going to operate the EAF5 plant at 100%. Which means there will be additional fixed cost which cannot be absorbed into the operation. You will be producing less billets. End of the day, if you produce less billets, you will be producing less rebar. Your overall production will be reduced. Which means your unit cost will be higher, your overall profitability will be lower. By moving into DR2, you are doing two good things. One is you are producing 1.5 million metric tons of DR. Out of that, 1.1 goes into your EAF5, the 400,000 DR is sold. The other point is, of the 1.1, you can continue to produce your rebar. Within the DR2, you can produce HBI also. As I mentioned earlier, the HBI is a higher quality steel product which could get some better margins. Okay. Thank you for that. Thank you very much. Anup Fernandes, SICO. Please go ahead. Hi. Thank you. The first question is, again, on the margins and the gas cost at your fertilizer. Just to understand, is the base price in the formula, is it a fixed price like a QAR 2, QAR 2.5 or whatever? Or is it the price at the end of the previous year? Secondly, is the variable component the average for the quarter or is it a moving average through the course of the year? Basically, the price in September would be the average urea price between January of 2022 and September of 2022, or does it move on a quarterly basis? The base price is a fixed price, a number, as you said. It could be a particular QAR value, QAR number. The indexation is a year-to-date number based on end product price. For the fertilizer, it's urea price. Any guidance on where the weightage is higher? Is it on the base price or is it on the variable side in the formula? Without giving out any numbers which you cannot share. I think that really depends on which side of the graph you are standing. In case of a high price environment, obviously the variable chunk can play a part, but in case of low price environment, the variable will play a part. That's very basic mathematically you can say. There is a break-even price. Below the break-even price, the base price plays a bigger part. Above the break-even price, the variable cost element plays a bigger part. Obviously, at the current level of urea prices, obviously the product price plays a bigger part. Okay. Just a question on the steel as well. You've mentioned shortage of scrap. Can you please give us some sense of what is really driving the shortage? Just a macro question. What is driving the shortage? Is it something that you're seeing only now or is it something that's been going for some time? Any color. Basically, most of the projects are coming to an end, right? When the project comes to an end, generally what is scrap? Old buildings, the vehicles that have been used have been reused. The scrap are coming from those, right? The demolished buildings and from those only the scraps are purchased. Now it is coming to a natural maturity. With that, the availability of scrap is getting reduced. This is locally sourced scrap. It is not imported, right? Yeah. Obviously, locally sourced scrap. Okay. Thank you. Leszek Baranski, Millennium. Please go ahead. Hello. I would like to ask a few questions about the recognition of revenues and inventories. Because in some cases you send your products. Let's focus on fertilizers. In some cases you send your fertilizers closer, let's say, to India. In other cases, you send it to South America. When do you recognize revenues? When you load the product on the ship or when product arrives? It depends on the Incoterms. There are FOBs and there are CIFs as well. Some shipments are recognized no sooner it's loaded to the ship. Some shipments are recognized no sooner it reaches the customer. Depending on the Incoterms. Muntajat advises us this shipment is on FOB, this shipment is on CIF. Depending on the Incoterms. Okay. On average, is there like a big difference that most of your contracts are on delivered basis or FOB basis? It varies from quarter to quarter? To my understanding, most of them are on FOB. Majority of them are on FOB. Okay. There is no big gap between, yeah, contract prices and loading. Okay. I think much of the risk is passed on to the counterparty. Because we don't take the shipping risk in most cases. Okay. Understood. Regarding inventories, you mentioned that in fertilizer business, usually you don't have big inventories. There were inventories end of 4Q, you sold it in 1st Q. When I look at your financial statement, financial statement is consolidated, it does not have only fertilizers, it has the other segments as well. It always shows some inventory. Is it true that fertilizer inventory- This is raw material. This has raw material, this has spare parts. Yes. All of that. This is not only the finished goods. Yes. You see in the inventory, you have iron oxide pellets. That's a big amount. You need those items to produce the finished goods. Yes. That is- Okay. Basically, should I assume that in fertilizer segment, usually end of the quarter, there's no much of finished product left in inventories? Yeah. Usually, you don't have. Okay. Understood. You might have little inventory. Yeah. Okay. Understood. Such situation will happen between 4Q and 1st Q. It's unusual. It happens sometimes, but not very often. It is one-off. It did not happen, it may not happen. It might happen once in a while. Okay. Understood. Coming back to 1st Q, because there were plenty of questions about pricing and so on. In 1st Q, I saw that prices were extremely volatile, so they were collapsing in February, and then they went up a little bit in March. Maybe it could be some part of explanation that actually, because prices were so volatile and Bloomberg is not showing you weighted average of these prices weighted with volumes. I guess that a lot of customers, they wanted to buy at the lower end of this volatility. Yeah, I saw this Indian tender, for example, it was finalized at the lower end rather than higher end. Maybe it could be some explanation why in first Q prices were lower, but I assume that hypothetically, if we assume that in second or third quarter, if prices are more stable, let's assume that average will be QAR 800 hypothetically, we should assume that Muntajat should realize prices close to average prices. Is that correct? Again, depends on to which geography it is sold and which basket of prices you use. Basically, as I said, there are different benchmarks. Say, for example, if it is delivered to the U.S.A., as one of the investors asked. This time, the shipments were mostly sold to Asia compared to the U.S.A. or the Far East. Depending on which market, depending on how the prices are realized, it could change. Again Muntajat itself does some benchmarking analysis. They themselves find their price realizations are generally above the benchmarks. As you said, probably if the timing of benchmarks are in line with Muntajat, they should align. Thank you. That's all time I have for questions today. With this, I'd like to hand the call back out to Bobby for closing remarks. Bobby, over to you. Thank you. I want to thank Abdulla, Riaz, and Safan for taking the time to answer our questions. There were a lot of questions this time. I guess we'll pick these up next quarter. Thanks, everyone. Thank you. Thank you. Thanks a lot, Bobby. Thank you. This concludes today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.