Construction

Infrastructure boost for Egypt’s Orascom Construction

Backlog grows by 9.4% to $4.6 billion as new awards in H1 2019 increased 41.8%

Orascom Construction, the Egypt-based construction giant, has said that its consolidated EBITDA increased by 26.8% in the first six months (H1) of the year to $142.4 million.

Pro forma EBITDA including 50% in BESIX increased 15.6%, y-o-y to $176 million in H1, while net income attributable to shareholders reached $31.3 million in Q2 2019 and $61.5 million H1 2019. The company’s consolidated backlog grew 9.4% y-o-y to $4.6 billion and pro forma backlog including 50% share in BESIX increased by 19.3% y-o-y to $7.3 billion as of June 30, 2019.

“We report another consecutive quarter of EBITDA and new awards growth, reflecting the strong execution of our projects alongside our successful business development efforts. The second quarter results also highlight the progress of our continuous cash management and collection initiatives as we report an improved net cash position and a return to positive operating cash flow,” said Osama Bishai, CEO of Orascom Construction in a statement released by the company.

“We also distributed a second consecutive annual dividend to shareholders in July of $0.30 per share, reflecting a 15 per cent increase over the previous year’s dividend. We witnessed healthy backlog growth of 9.4 per cent to $4.6 billion as new awards in H1 2019 increased 41.8 per cent, driven by quality new awards in the Middle East and the US.

“Among these projects are the largest water treatment plant in Egypt, roads and infrastructure work in Egypt and data centre projects in the United States. This current backlog level comfortably provides us with sufficient revenue and profitability as we continue to pursue an exciting project pipeline across existing and new markets,” he added

Consolidated new awards increased 41.8% y-o-y to $1.4 billion and pro forma new awards including 50% share in BESIX increased 22.1% y-o-y to $2.4 billion in H1 2019. A dividend distribution of $35 million ($0.30 per share) was paid out to shareholders in July 2019, the company statement added.

“In addition, we announced earlier this month that we signed a contract along with Bombardier Transportation and Arab Contractors to design, build, operate and maintain two monorail lines in Egypt for a total value exceeding $4.5 billion,” Bishai said.

“This project will be executed on an EPC + Finance basis, which underscores our consistent ability to provide this service and raise financing from reputable international financial institutions on behalf of our clients.

“Our share of this contract is close to $900 million and includes Operation and Maintenance (O&M) for 30 years, highlighting our strategy to develop recurring income lines alongside our core EPC business. We have now secured a number of O&M contracts across power, water treatment, wastewater treatment, water desalination, transportation and facilities management.

“Our business in the US continues to benefit from the turnaround efforts initiated in 2018, reporting positive EBITDA and the highest quarterly order intake since Q3 2016. We are also excited to increase our presence in new sectors such as data centres and airports to complement the existing core market segments.

“Lastly, BESIX maintained its strong level of backlog of EUR 4.8 billion and signed EUR 1.0 billion of new awards in Q2 2019. BESIX continued to distribute dividends of EUR 20 million in June for our 50 per cent share,” he concluded.

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