Orascom Construction Q3 profit jumps 10.7% on higher revenue

The Egyptian firm signs $1.8 billion worth of new contracts in the Middle East in the first nine months of 2019

Egypt’s Orascom Construction signed approximately $335m of new contracts in the Middle East during the first quarter of 2020. Dana Smillie / The National

Egyptian  infrastructure and engineering group Orascom Construction reported a 10.7 per cent increase in its third quarter net profit due to higher revenue.

Net profit for the three months to the end of September rose to $32.2 million (Dh118.2m), the company said in a statement on Thursday. Revenue for the reporting period jumped 8.3 per cent to $789.6m from a year earlier.

“Our operations in the Middle East and Africa have been delivering consistent, healthy revenue and margins. In the US, we are pleased with the progress of our turnaround efforts and successful business development activities,” said Orascom’s chief executive Osama Bishai. “We generated positive operating cash flow ... and have maintained our overall net cash position despite a challenging first quarter.”

Orascom Construction is a global engineering and construction contractor primarily focused on infrastructure, industrial and high-end commercial projects in the Middle East, Africa and the US.

The group signed approximately $1.8 billion of new awards in the Middle East during the first nine months of the year, of which $965m were added in the third quarter. The company reported a 25.2 per cent increase in consolidated backlog to $5.2bn, while pro forma backlog surged 26.2 per cent year on year to $7.7bn.

In Egypt, the group signed a new contract in a consortium with Bombardier and Arab Contractors to design, build and operate two monorail systems for $4.5bn, it said.

In addition, an Orascom Construction joint venture will execute all 160 km of track work for the new electric light rail transit project in Egypt.

“With the addition of these two projects, OC (Orascom Construction) further reinforces itself as a major player in all traditional and new segments in the transportation sector including Cairo Metro, airports, roads and tunnels,” the company said.

During the nine months of 2019, the company reported a profit of $93.7m compared to $111.6m during the same period last year. Revenue during the period fell 2.2 per cent year-on-year to $2.28bn.

The group maintained its net cash position at $63.4m as of September 30, 2019, compared to a net cash position of $27.2m as of December 31, 2018.

The US subsidiaries continued the positive new awards momentum generated in the first half of the year and signed new contracts totaling $380m in the third quarter, it said.