Egypt's Orascom posts 25% net growth for 2010

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Orascom Construction Industries saw net profits increase by more than a quarter for the first half of this year and by 41% in the second quarter, compared to their equivalent periods in 2009 on the back of strong contract wins and recent acquisitions, the company reported yesterday.

In a note to the stock exchange, the Egyptian construction firm saw revenues for the last six months leap 21.3% to EGP12.8 billion from EGP10.7 billion, with after tax income rising 25.3% to EGP1.4 billion.

Revenues for the April-to June period this year increased 36% to EGP7.4 billion against the first quarter of this year and by 23% to EGP6.1 billion against the second quarter of last year.

“Construction of Sorfert Algeria continues to progress on-track with the plant 94.2% complete as at the end of July and commissioning scheduled for early 2011. OCI and Sonatrach continue to jointly make positive progress with 62 Algerian technicians and engineers having completed full technical training at the Group’s plants in Egypt during the first half of the year,” said Nassef Sawiris, Orascom’s chairman and CEO.

Orascom is a construction group based in the emerging markets that owns 50% of Besix Group – a collection of industrial companies – and has full ownership of Contrack International, an EPC contractor.

It also has a significant business line in nitrogen-based fertiliser and this quarter it completed the acquisition of the agrochemical and melamine businesses of Royal DSM NV. These assets have since been rebranded and accounted for in the group’s financial statement, according to the company.

Orascom has a separate entity for road projects and cement.

The company secured US$678 million worth of contracts in the second quarter and US$1.47 billion in total this year. Orascom’s contracting backlog stood at US$6.3 billion, falling 3.4% compared to last year which the company accounts to a weakened Euro. Infrastructure work makes up almost 64% of its work.

Earlier this month the company announced that its joint venture with Belgian contractor Besix had secured a contract worth US$60 million for the offshore works of the new Supercritical 2x650 MW oil and gas powered power plant in Ain El Sokhna.

The company is hopeful of government linked project soon on the back of changing legislation in Egypt.

“The protracted ratification process of the newly passed legislation for Public-Private-Partnerships (PPP) is finally completed and we expect tendering of new infrastructure projects in Egypt to accelerate during fourth quarter and early next year,” said Sawiris.

Orascom is the biggest of the construction companies on the Egyptian Exchange, with a market capitalization of EGP53 billion. Its stock price was trading at EGP256 per share yesterday, creeping up to the EGP260 on 10th August last seen in the first week of May.

Ahmed Shams El Din, an analyst at EFG Hermes in Cairo, maintained a 'neutral' recommendation on the stock yesterday. Mohammed El Ebrashi at Commercial International Brokerage Company recommended the stock be bought on 23rd August.