Orascom second-quarter profit slides

Orascom Construction reported a 22 per cent year-on-year decline in second-quarter pro­fit amid a tough Saudi market, the Egypt-based contractor said on Wednesday.

Net profit plunged to US$26.4 million from $34m a year earlier, the company said.

Revenue remained largely flat at just over $1 billion.

Orascom, whose shares are listed on Nasdaq Dubai, said that the Saudi Arabian market remained particularly challenging, with chief executive Osama Bishai stating that it was continuing “to take prudent measures” to limit its exposure to the kingdom.

“Our focus in all Mena markets remains on quality projects where we have a competitive edge and are comfortable in the source of funding,” Mr Bishai said.

Revenue for the first six months of the year increased by 6.5 per cent to almost $2bn, and net profit increased by 24 per cent to $49.4m.

Half of the revenue earned by the company during the first six months came from the Mena region and the other half came from work in the US.

Of the 50 per cent earned in the region, 44 per cent was generated in Egypt.

The company reported a 4.8 per cent year-on-year increase in its backlog to $7.5bn, or $9.5bn once its 50 per cent stake in contractor Besix is accounted for. New projects won include a joint venture deal to build three tunnels across the Suez Canal and new work on the Cairo ­Metro programme.

Mr Bishai said the firm had made “steady progress” throughout the first half of this year, and highlighted the diversity of projects it has secured in Egypt, which “reflects our position as an integral player in the development of Egypt’s infrastructure.

“While the power sector in Egypt led our Mena backlog growth last year, our varied skillset and strong market presence have allowed us to capitalise on increased spending across other sectors,” he said.

The number of new contracts awarded to Orascom dropped by 16.5 per cent year-on-year to $2.7bn, but in a note published by Egypt-based investment bank EFG Hermes, its analysts said that the level of new awards “surprised positively” given the fact that only $510m was awarded in the first quarter. It had esti­mated new awards of $650m, but the award of the Suez Canal tunnelling contract has added $900m to $1bn, according to analysts’ estimates.

Egypt now represents 63.5 per cent of the company’s backlog, the US around 26 per cent and Saudi Arabia 4.6 per cent.


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