Orascom Construction boosted by new project wins

Company says backlog has increased by 51 per cent to more than $7bn following contract wins in three core markets of Egypt, Saudi Arabia and the US.

Orascom said it had improved operational performance and secured a number of new contracts during the second quarter of this year. Dana Smillie for The National

Orascom Construction reported a net profit of US$39.8 million (Dh146.2m) for the first half of the year from revenue of $1.87 billion.

The Egyptian contractor demerged from its former parent, the fertilizer group OCI, in March when it secured a dual listing for its shares on both the Nasdaq Dubai and the Egyptian stock exchange.

As a result, Orascom Construction did not provide direct comparative figures, but its revenue was significantly higher than the $1.02bn achieved by the former engineering and construction business within OCI in the first half of last year.

Earnings margins were also higher at 5.4 per cent – up from 4 per cent last year.

The company said it had improved operational performance and secured a number of new contracts during the second quarter of this year. Second-quarter earnings were $34m, compared to $5.8m in the first quarter. Its 50-per-cent share of the contracting company Besix contributed about half ($16.9m) of the second-quarter profit.

The biggest of Orascom Construction’s new contracts came from Egypt, where it has won a number of deals in the transport sector covering airports, roads and bridges.

It also signed a $1.8bn deal in the power sector to deliver two combined-cycle natural gas power plants capable of generating 9,600MW through a consortium with Siemens.

A joint venture with Saudi Binladin Group also landed a $125m project to provide all of the civil infrastructure for a 64,000 square metre, mixed-use project.

As a result, its backlog has grown to $7.19bn by June 30 – up 51.3 per cent from $4.75bn a year ago.

About 47 per cent of this is in Egypt, 32.6 per cent is in the United States, 15 per cent is in Saudi Arabia and 1.7 per cent is in Algeria. About 65 per cent is for government clients.

The Orascom Construction chief executive Osama Bishai said the $7bn backlog figure was the highest in the company’s history and followed the addition of new contracts in three of its core markets – Egypt, Saudi Arabia and the US. He added that the company was “proud” to have delivered two new power plants at West Damietta and Assiut ahead of schedule for the Egyptian government.

“Furthermore, we have made significant progress towards adding another infrastructure investment to our portfolio, as we have already received a letter of award for the Abu Rawash Wastewater Treatment Plant concession in Giza, Egypt.

“This project will be carried out as a public-private partnership and marks the second such investment for Orascom Construction.” A report by the Citi analyst David Cowan last month said the recent Egypt investment conference that took place at Sharm El Sheikh in March “seems to have boosted short-term confidence in the economy, helping to support the current economic recovery”.

However, he added that its economy remained “fragile” and was dependent on support from Gulf countries.

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