The growth strategy for the future, remains as in the past, on product diversification (which is part of the old and new Sustainability Roadmap), and raw material securitization as key focus areas for the short and long term. In spite of the uncertainty and a rocky start to the year, near- to medium-term prospects domestically remained encouraging.
In view of the unstable market conditions, we took a prudent approach to impair the net book value of the facilities mothballed. The sales volumes were also impacted due to the management’s decision of mothballing certain facilities, with an intention to cater local sector demand only, as compared to the international demand, amid higher competition and declining margins internationally. Furthermore, even local demand weakened in 2020 owing to the closure or near completion of large infrastructure projects.
Company recorded a net loss of QR 1.3 billion for the year ended 31 December 2020 versus QR 36 million of segmental profit the year 2019. The net loss includes an impairment loss of QR 1.2 billion relating to mothballing of part of Qatar Steel’s production facilities. The net loss, excluding the one-off effect of impairment loss, would amount to QR 89 million.
While economic uncertainties continued to prevail, selling prices slightly improved in the second half of 2020, by 6% compared to last year, amid management’s decision to cater the local demand predominantly starting from Q2 of 2020, where the prices of steel tend to be higher than the international markets. Qatar Steel continued its profit-making trajectory after having a difficult first half of 2020 and following the strategic restructuring initiatives implemented. Mothballing of certain steel facilities allowed Qatar Steel to primarily focus on the profitable domestic market, which led to adjustment of its cost base. Moreover, due to the improvement in the international prices, we were also able to sell some of the quantities outside the domestic market. By changing the raw material mix, we reduced our costs without affecting the quality of the final product.
Till 2020, Qatar Chemical and Petrochemical Marketing and Distribution Company (Muntajat) Q.J.S.C. had been in charge of the marketing, sales and distribution of Qatar Steel products. In June 2020, Qatar Petroleum (QP) announced a decision to integrate Muntajat into QP as part of its ongoing efforts to strengthen its downstream capabilities and further enhance the State of Qatar’s global competitive position in the downstream sector. As part of this integration, it was concluded that effective from 1st September 2020 the Qatar Steel’s Sales and Marketing functions of Muntajat’s Metals business would be integrated back into Qatar Steel. This enabled us to efficiently serve customers and perform all sales, as well as marketing and distribution activities of steel products to the client markets