Orascom aims to return to profitability after 2015 losses

25 April 2016

Middle East and North Africa remained positive with 15.4 per cent margin

Orascom Construction says it expects to return to profitability during the first quarter of 2016 after it made a 7.8 per cent loss of $302.4m on $3.882bn of revenues during 2015.

The return to profitability is expected as backlog grew 14 per cent to $6.7bn during 2015 with the group signing contracts totalling $4,8bn in Egypt alone.

The 2015 losses were mostly due to the company’s poor performance in the US where it made a 33.2 per cent loss of $615m on $1.852bn of revenues. There was a non-recurring negative impact of $347.8m related to the construction of a plant for Iowa Fertilizer Company.

The Middle East and North Africa business performed better, it made a profit of $312.5m on $2.030bn of revenues – a positive margin of about 15.4 per cent. “We are pleased with our performance in the Middle East and North Africa (Mena) where we generated healthy profit and cash flow. We also reinforced our position as a leading contractor in Mena and are currently executing a number of landmark infrastructure projects, including almost 10,400MW of combined cycle power projects and three tunnels below the Suez Canal in Egypt,” said Orascom Construction CEO Osama Bishai in a statement accompanying the results.

Orascom says the positive result for the region includes provisions made on projects in Saudi Arabia, as well as a one of gain of $38.4m that resulted from the positive outcome of the group’s arbitration against Golden Pyramids Plaza for the City Stars project in Egypt.

Looking forward, the weakness of Saudi Arabia’s project market will continue to be an issue. “While we are facing a challenging market in Saudi Arabia that has affected our project execution and profitability, we are working on mitigating our exposure there and are focused on executing current projects while remaining selective on new opportunities,” said Bishai.

Orascom Construction is dual listed on Nasdaq Dubai and the Egyptian Exchange.

Orascom wins Egypt power conversion deal

Power plant

Power plant

Power plant

The local Orascom Construction has been awarded a $420m contract to convert the Assiut and West Damietta power plants to combined-cycle plants.

Orascom was one of the contractors on the first phase of both power plants, which were both completed in 2015. The Assiut plant currently has a capacity of 1,000MW, with the West Damietta plant currently producing up to 500MW. Read more

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