Qatar Navigation Co expects a proposed merger with Qatar Shipping Co to be concluded by the end of 2009, heeding government calls for more consolidation in the face of the global economic slowdown.
Governments in the energy-exporting Gulf Arab region have been encouraging mergers as a means of bolstering firms against the crisis. The government of Qatar, the world’s top exporter of liquefied natural gas, ordered the two companies to merge in November, and has called for other tie-ups since.
Qatar Navigation and Qatar Shipping hired HSBC Middle East in May to advise on the proposed merger.
“The merger should take place during the next six months,” Mohammed al-Sulaiti, deputy chief executive of administration and finance affairs at Qatar Navigation, told Reuters in early June.
Qatar Navigation, which handles cargo, ships petrochemicals and repairs ships, posted a 23 per cent drop in first-quarter net profit because of the global drop in freight prices and the amount of cargo it handles as the world economy slows.
Global crisis
Gulf Arab energy exporters embarked on major expansion projects during a six-year year boom fuelled by record oil prices but have suffered as the global crisis hit oil prices and shook the real estate and financial sectors.
Sulaiti said it was not yet decided which of the two firms would buy the other.
Qatar Navigation already owns 15 per cent of Qatar Shipping through its local equities investment portfolio.
It also owns 15 per cent of Qatar Gas Transport Co (Nakilat), the world’s biggest shipper of liquefied natural gas.
Its equities portfolio stood at QR3.3 billion ($907.1 million) at the end of March, nearly 60 per cent of the company’s total assets.
The company has four ships and is building four more to cater for the growth in the petrochemical production in Qatar.
“If the economic outlook improves, we expect profit in the second half to be satisfactory,” Sulaiti said. “Export is not slowing because of the increase of petrochemical production in Qatar.”
The company, which is also involved in real estate projects, may invest in further property projects because it has sizeable plots of land and foresees growth in real estate, he said.
“The Qatari economy is expected to continue to grow at a fast pace and the country will need real estate projects,” Sulaiti said. “Income from our real estate projects should help boost income starting 2010.”
Meanwhile, Qatar Shipping announced it is selling its subsidiary Qcon (Qatar Engineering and Construction Company) to Qatar America Asia Consortium (QAAC) for more than QR400 million.
In other Qatar news related to transportation, Qatar Gas Transport Co (Nakilat), the world's biggest shipper of LNG, said it raised $949 million to fund new ships, the last tranche of a $6.8 billion financing programme.
Nakilat plans to build 25 ships in Korean shipyards and has received 14 so far and expects to receive all by the end of 2010. Besides, it has stakes in 29 other vessels.
