Orascom Construction’s Q1 profit slides on the back of lower revenue

Net income in the first three months of the year fell 4% to $23.9m

Egypt based Orascom Construction reported a 4 per cent drop in its first-quarter profit. Dana Smillie for The National

Egypt-based Orascom Construction reported a 4 per cent drop in its first-quarter profit as revenue plunged amid the Covid-19 pandemic.

Net profit attributable to owners of the company for the period ending March 31 declined to $23.9 million, the company said in a statement to Nasdaq Dubai, where its shares trade. Revenue during the period dropped 1.3 per cent to $816.6m.

“We are satisfied with our backlog level and the progress of our project pipeline,” Osama Bishai, chief executive of the company, said.

“New awards increased 11.2 per cent year-on-year to $666.4m in first quarter of 2021, demonstrating our successful efforts in signing a range of high-quality projects across the infrastructure, transportation and commercial sectors while maintaining our backlog at $5.4 billion as of March 31, 2021.”

The company is also “seeing an interesting pipeline of projects in the US and are confident in our new award levels there in second quarter of 2021”, Mr Bishai said.

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

Revenue in the company’s Middle East and Africa business grew 4.9 per cent to $580m, while revenue from its US operations slid 14 per cent to $236.6m.

The company signed $570m worth of new contracts in Egypt during the quarter. This includes a contract to build the Magdi Yacoub Global Heart Centre in Cairo and Emaar’s Vida Marina Hotel & Yacht Club at Marassi Beach on the north coast.

Orascom's US subsidiaries signed $96m of new contracts, mostly in the commercial and light industrial sectors and it expects to sign new contracts in the second quarter in the data centre sector.

Belgian contractor Besix, in which Orascom Construction controls a 50 per cent stake, reported a negative contribution in the first quarter, the company said.

“Backlog was maintained year-on-year at a healthy level of €4.7bn [$5.72bn] following a strong quarter of new awards," Mr Bishai, said. "This should provide a solid foundation for Besix’s recovery this year.”

Orascom, which has a dual listing on the Egyptian Exchange, approved a dividend of $27m to shareholders, marking the fourth consecutive year of dividend distribution.