MPHC eyes 'selective capex programme' to lift market competitiveness

07/03/2018 07:25 AST

Mesaieed Petrochemical Holding Company is embarking on a "selective capital expenditure programme" to maintain competitiveness in the market, it was announced yesterday during MPHC's annual general meeting.

MPHC chairman Ahmad Saif al-Sulaiti told shareholders that aside from suitable business opportunities, continued investments in operating assets "are essential to remain competitive in the market."

Though he did not mention any specific figure, al-Sulaiti noted that the investments "will further strengthen the group's competitive position in the region." "And we will continue to invest when the right opportunity becomes available," al-Sulaiti told the meeting, which approved the board's recommendation to distribute a payout of QR0.7 per share, representing 81% of the group's profit.

Citing several competitive advantages, al-Sulaiti said MPHC has "excellent" cost positioning, largely due to competitively priced feedstock. The group benefits from access to competitively priced feedstock under long-term supply agreements, he said.

"The company also enjoys a number of synergies through integrated production and export operations. Through its marketing agent, Muntajat, MPHC has gained access to a diverse base of worldwide clients. In addition, the group companies have established themselves as premier petrochemical producers, with the companies being established between 1997 and 2005, with recognised operational track records and the proven ability to continue to generate strong operating cash flows.

"The group has set a primary strategy of maximising shareholder value by capitalising on its three group companies' numerous competitive strengths across its value chain. The board is confident that the group can build on these core strengths to mitigate the risks and challenges posed by the current economic situation," al-Sulaiti said.

According to al-Sulaiti, MPHC continued to focus on optimisation of costs on people, processes, operations, and assets during the year. "These efforts have paved the way to enhance the value of MPHC's shareholders, who over the years, have made a memorable journey. The recent Qapco-QVC integration was part of the cost optimisation initiatives undertaken during 2017 and was successfully completed by year end.

"Although some of the synergies in operations and support functions have been realised in 2017, the benefits would be reaped in full in 2018.The group will continue to strive in further optimising the costs, resulting in improved performance and thus adding value to the shareholders," he said. MPHC's net profit surged by 9% to reach QR1.1bn in 2017, driven by higher revenue and improvements in the other income, while total assets closed at QR14.8bn, with a solid liquidity position as cash held by the company stood at QR1.4bn.

Gulf Times