Orascom Construction reports profit fall despite higher revenue

The company signed $2.9bn worth of contracts in 2020, bringing its backlog to $5.4bn

Orascom Construction last year signed $2bn worth of new contracts in Egypt to complete works related to Cairo metro and other projects. Dana Smillie for The National

Egypt-based Orascom Construction reported a 25 per cent drop in its full-year net profit as its cost of sales and expenses rose, despite an increase in revenue.

Net profit attributable to owners of the company for the period ending December 31, 2020, declined to $90.9 million, the company said in a statement to Nasdaq Dubai, where its shares trade. Its cost of sales rose 8 per cent to $3 billion, while selling, general and administrative expenses jumped 15 per cent to $186.4m. Revenue increased 6 per cent to $3.37bn.

“Revenue increased ... as our projects operated on a full-fledged basis despite additional challenges on the health, safety and business fronts,” Orascom chief executive Osama Bishai said. “The group also generated positive operating cash flow and maintained a net cash position, reflecting healthy operations and our successful collection and working capital efforts.”

The company finished the year with net cash of $358.6m, up from $208.9m at the end of 2019.

Cairo-based Orascom is an engineering and construction contractor primarily focused on infrastructure, industrial and high-end commercial projects in the Middle East, Africa and the US.

Revenue in the company’s Middle East and Africa business grew 3.4 per cent to $2.1bn. Revenue from its US operations rose 26.2 per cent to $1.26bn.

The company last year signed $2bn worth of new contracts in Egypt to complete works related to the Cairo Metro and other projects. In the US, it signed $920m worth of contracts.

“Our new awards ranged across core sectors such as transportation, infrastructure, data centres and logistics, and complement our existing backlog as we initiated work on important projects including the world’s longest monorail system in Egypt,” Mr Bishai said.

The awards meant the company finished the year with a consolidated backlog (excluding its 50 per cent stake in contractor Besix) of $5.4bn, similar to the level at the end of 2019. More than three quarters (76.4 per cent) of this is in Egypt, but 15.8 per cent is in the US and 3.7 per cent in Saudi Arabia.

The company, which has a dual listing on the Egyptian Exchange, is proposing a dividend of $27m to shareholders, marking the fourth consecutive year of dividend distribution.