Orascom Construction posts 113% profit rise driven by contract awards

Egyptian construction firm said it paid a $30m dividend to shareholders last month

Egypt’s Orascom Construction posted a 113% profit rise in the second quarter of 2018, driven by new contract awards. Dana Smillie for The National

Egyptian contractor Orascom Construction reported a 113.5 per cent increase in net profit in the second quarter of the year, boosting its income through new contracts and progress on existing schemes.

Net income attributable to shareholders rose to $50.6 million (Dh186m) in the three months to June 30, and revenue stood at $2 billion – up from $947m a year earlier, the company said on Wednesday in a regulatory filing on Nasdaq Dubai, where the company’s shares are traded.

"Our second-quarter results demonstrate our steady progress throughout the year as we generated a healthy bottom line while achieving operational milestones and maintaining our backlog," said Osama Bishai, the Orascom chief executive. The company paid a dividend of $30m to shareholders in July.

Growth was driven by strong performance in key markets including Egypt, where the company is diversified "across all major construction segments and continues to be an integral player in the development of the country's infrastructure and new cities", Mr Bishai said.

The company also posted a rise in first-half net profit to $82.5m, up 60 per cent from the first half of 2017.

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Orascom is ramping up activity in water-related projects, having completed a 150,000 cubic metres per day desalination plant ahead of schedule this year, and started to build a second facility of the same size. Work has started on Abu Rawash Wastewater Treatment Plant, and the company is on target with its operations in the energy sector, which include a 250-megawatt wind farm in Egypt.

Besix, a European engineering services company in which Orascom has a 50 per cent stake, continued to deliver a solid performance. Besix had an awards backlog of €3.3bn (Dh14bn) as of June 30, and secured €1.5bn of new awards in the first half of this year, Orascom said.

There was also an improvement in the company's US business, with new contract awards during the quarter, led by the new Sky Train project at Phoenix International Airport. There was also the start of production at Natgasoline, the largest methanol production facility in the United States, this year.

“These milestones further strengthened the group’s industrial track record encompassing petrochemicals, fertilisers and cement projects across 11 countries around the world,” Mr Bishai said.

“We continue with our optimisation and integration efforts in the US, which we expect to start paying back by year-end and in 2019. We also remain focused on the core US commercial business as well as international projects in the Middle East.”