Orascom Development hit by Egyptian unrest

Orascom Development earnings have been pummeled by the political turmoil in Egypt.

The political turmoil in Egypt has taken a toll on Orascom Development.

The company yesterday reported that net profit fell by 98 per cent in the first quarter to 600,000 Swiss francs, down from 26 million francs in the same period last year.

Orascom has major tourism developments in Egypt, including its flagship El Gouna resort on the Red Sea.

Its hotel revenue dropped by 40 per cent in the first quarter as occupancy rates in the company's hotels in Egypt fell to 42 per cent.

Tourism has suffered in Egypt as tour operators cancelled trips to the country and travel warnings were issued amid the recent unrest.

"Shortly after the end of the reporting period, occupancy rates in Egypt have improved gradually following the removal of most travel bans to Egypt," the company said. "However, the number of flight connections remains subdued because capacities have been shifted to other destinations and these will only be re-allocated to Egypt over time."

Orascom has a dual market listing, with a primary listing on the Swiss Exchange and a secondary listing in Cairo.

The company's property revenue was also hit hard by the turmoil - falling 71 per cent from the same period last year. Construction activity was halted for 50 days during the political unrest.

Orascom argued, however, that its "first-quarter results should not be indicative of 2011 full-year performance".

The company said it would continue to expand abroad to diversify its revenue.

It has projects in countries including Montenegro and the UK and is developing a ski resort in Switzerland. The company owns the Cove Rotana hotel in Ras al Khaimah.

Orascom said its hotel operations in the UAE and Jordan had improved, with occupancy increasing to 77 per cent in the first quarter, up from 58 per cent in the same period a year earlier.