By John Irish
Weaker demand, lower prices hit second-largest Gulf chemical producer by market value.
Industries Qatar, the second-largest Gulf chemical producer by market value, posted a more than 90 percent dive in fourth-quarter profit on Thursday, on weaker demand and lower prices for chemical products.
Industries Qatar shares tumbled 8.17 percent after the company, Qatar's largest by market value, posted net profit of about 100 million riyals ($27.46 million), down from 1.58 billion riyals in the year-earlier period.
The state-controlled company, which produces petrochemicals, fertilizers and steel, is the latest company in the oil-exporting Gulf region to suffer from a downturn in demand as the global financial crisis bites.
"This was expected. It is due to demand destruction in addition to severe price reduction for its products," said Rami Sidani, head of investment for the Middle East and North Africa at Schroders.
Last month, Saudi Basic Industries Corp (SABIC), Middle East's largest chemical producer, said fourth-quarter profit plummeted 95 percent on weakening demand for petrochemicals.
SABIC responded by saying it would halt output at some plants and cut jobs.
Industries Qatar neither gave a breakdown of its results nor said how it would respond to the global downturn.
Mohammed Al Shirrawi, finance director at state-owned Qatar Petroleum, which controls Industries Qatar, could not be reached for comment.
Industries Qatar, whose shares have already plunged more than 30 percent this year, missed quarterly earnings forecasts of 2.28 billion riyals and 1.92 billion riyals, two analysts in a Reuters survey in December said.
Thursday's stock price drop was the biggest since Dec. 24.
Analysts expect Gulf chemical companies to face a tough year as much of the industrialised world falls into recession and the Gulf region comes to terms with a more than $100 a barrel slump in oil prices since they peaked at $147 a barrel last July.
Qatar Steel, a unit of Industries Qatar, said in December demand for reinforcement steel used in construction in the Gulf Arab region would fall by at least 30 percent in 2009.
Hundreds of billions of dollars in property projects have been cancelled across the Gulf, particularly in the United Arab Emirates, where the emirate of Dubai is suffering from a real estate price slump.
Still, Qatar's economy is expected to be the fastest growing in the Gulf region in 2009. Its minister of state for energy and industry affairs said this month the economy should expand about 10 percent this year as it boosts natural gas production.
Industries Qatar made profit of 7.3 billion riyals in 2008, compared with 5 billion riyals in 2007. It did not give quarterly data, which Reuters calculated from prior financial statements to show it earned 7.2 billion riyals in the first nine months of 2008. (Reuters)