Orascom moves back in black as contract wins boost backlog

Egypt’s Orascom Construction reported a net profit of US$23 million for the first three months of the year. Dana Smillie for The National

Orascom Construction is targeting opportunities in the power, transport and water sectors in its home market of Egypt as profits jumped in the first quarter.

The company reported a net profit of US$23 million for the first three months of the year, which is nearly four times higher than the $5.8m profit reported in the same quarter last year, and a marked improvement on the US$411.9m loss declared in the fourth quarter of 2015, which was due to a $485m loss incurred by its US arm on a project to build a huge fertiliser plant in Iowa for former parent Orascom OCI.

The growth in net profit was a result of higher ebitda, which increased by 29 per cent to $48.8m compared with $37.9m in the same period last year, and a greater contribution from associates.

During the quarter, the company’s backlog grew by 9 per cent to $6.7 billion, although if its 50 per cent share of contractor Besix is included, backlog grew by 10 per cent to $8.4bn.

Orascom won $510m worth of new contracts during the quarter, while Besix and its joint venture partner Ssangyong secured a $1.4bn contract to build the new Royal Atlantis resort at Dubai’s Palm Jumeirah.

Osama Bishai, the chief executive of Orascom Construction, said: “We successfully added quality projects to our backlog that fit our criteria and improve our positioning across our markets, while focusing on executing our existing work.

“We are confident in the long-term fundamentals of our core markets, characterised by growing populations with a need for infrastructure and industrial investment.”

More than 60 per cent of its backlog now comes from the Mena region – 47 per cent from Egypt, 10 per cent from Saudi Arabia and over 3 per cent from Algeria.

Moreover, earlier this month its consortium picked up a €375m contract to build the third phase of Cairo Metro’s Line III. Its share of the deal, for civil and track works, is worth €270m.

Mr Bishai said that it is “well-positioned for additional projects across the infrastructure, industrial and commercial sectors” in Egypt, including work at the country’s new administrative capital to the east of Cairo.

“In addition, we remain focused on completing existing work in Saudi Arabia, while carefully managing our resources and maintaining our selectivity on new projects amid a challenging market environment.”

Speaking at the Meed Construction Leadership Summit on Wednesday, Johan Hesselhoe, the managing director of advisory services at building consultancy Atkins, said that he expects the Saudi market to return to growth in 2017.

“The question, I think, is when in 2017. I think an optimistic view would be the first half of 2017, but I wouldn’t bank on that.”

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