Profits slide at Egypt’s Orascom Construction

Contractor says it continues to limit its exposure to the ‘challenging’ Saudi Arabian market

Egypt’s Orascom Construction on Wednesday reported a 22.4% drop in second-quarter profits, as the contractor said it continues to limit its exposure to the “challenging” Saudi Arabian market.

Orascom Construction, which is dually listed on the Nasdaq Dubai and Egyptian Exchange, said in a statement that its net income to shareholders fell to $26.4 million in the second quarter, down from $34 million last year.

Revenue for the quarter rose by a fraction to $1.024 billion, up from $1.016 billion a year ago. Half-yearly revenue increased 6.5% over 2015 to $1.997 billion, Orascom said.

Its order backlog stood at $7.5 billion as at 30 June 2016, bolstered by $2.2 billion in new awards during the second quarter.

“We signed a number of key contracts that have propelled our backlog to a new high, providing us with significant visibility as we continue to selectively pursue new work,” said Orascom Construction CEO Osama Bishai.

“Furthermore, our current backlog reflects our position as an integral player in the development of Egypt’s infrastructure. While the power sector in Egypt led our MENA backlog growth last year, our varied skillset and strong market presence have allowed us to capitalize on increased spending across other sectors.”

But the Saudi market remains “challenging”, Bishai added.

“We continue to take prudent measures to limit our exposure there. Our focus in all MENA markets remains on quality projects where we have a competitive edge and are comfortable in the source of funding,” he said.

Recent project wins include a joint-venture project to build three tunnels spanning the Suez Canal in Egypt, and a collaboration with BESIX on a new LNG-receiving jetty in Egypt.

“BESIX has made a successful comeback in 2016, reporting higher backlog and improved profitability. We are also pleased to partner with BESIX on a new award for an LNG-receiving jetty in Ain El Sokhna, Egypt,” Bishai said.

“Our US subsidiaries, Weitz and Contrack Watts, are contributing healthily to our backlog, signing over $320 million in new awards during the second quarter excluding committed work. We continue to focus on enhancing this segment including potential investment opportunities.”

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