Big profit jump at Middle East's biggest publicly traded builder

On The Wires: Egypt's Orascom Construction Industries has posted its first-quarter result with profit jumping 77 per cent.

Mahmoud Kassem

CAIRO // Orascom Construction Industries, the biggest publicly traded builder in the Middle East, said first-quarter profit jumped 77 per cent, boosted by higher fertiliser sales at its OCI Nitrogen unit.

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Last Updated: May 11, 2011

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Net income rose to $206.1 million from $116.5m a year earlier, the Cairo-based company said in a statement today. Sales increased 28 per cent to $1.26bn.

"We expect fertiliser prices to remain firm," Nassef Sawiris, chairman and chief executive officer of Orascom Construction, said in the statement. "Rising coal prices in China have pushed Chinese production cash costs higher which in turn have raised the global floor of urea prices."

Orascom's fertiliser group sold 1.1m tons of nitrogen-based fertilisers in the first quarter compared with 0.47m tons a year earlier, the company said. Netback ammonia and calcium ammonium nitrate prices increased 22 per cent and 38 per cent respectively, Orascom said.

The financial contribution of OCI Nitrogen, previously called Royal DSM, wasn't included in first-quarter financial results last year because of the timing of the closing of the unit's purchase, the company said.

Orascom's expansion of a calcium ammonium nitrate line in the Netherlands is expected to be in full production during 2012, adding about 300,000 tons, or 25 per cent, of additional capacity, according to the statement. Sorfert Algeria, the Algerian unit, was 96.4 per cent completed at the end of March, with commercial production due to start in the fourth quarter.

"We are analysing some greenfield operations in emerging markets at the moment," Mr Sawiris said in a telephone interview today.

First-quarter income from Orascom's investment in Gavilon rose to $25.5m from $14.1m in the fourth quarter, the company said. Orascom bought a 20 per cent stake in Gavilon for $340m in July 2008 to bolster its fertiliser and agricultural supply business.

Orascom's construction group secured $330m of construction work in the quarter and is the preferred bidder for as much as $1 billion of projects.

"Despite political unrest in our key regional markets during the quarter, we feel confident that infrastructure spending will continue to accelerate in order to stimulate these markets' economies and create immediate employment," Mr Sawiris said.

Bloomberg News