Orascom Construction's second-quarter profit jumps 143% on revenue and order backlog

Egypt-based Orascom Construction reported that its second-quarter net income jumped by about 143 per cent as revenue and new orders grew despite coronavirus-induced headwinds.

Net profit attributable to owners of the company for the three months to the end of June rose to $23.8 million, the company said in a statement to Nasdaq Dubai, where its shares are traded.

Quarterly revenue rose 9.7 per cent to $868.3m, driven by a 28.8 per cent and 18.5 per cent jump in contribution from the company's Middle East, Africa and US businesses.

Earnings before interest, taxes, depreciation and amortisation for the three-month period rose to $49.4m, a more than 40 per cent year-on-year increase, the company said.

“Revenue, Ebitda and net income recovered in the second quarter of 2021, reversing a slower first quarter, resulting in a steady overall financial performance,” said Osama Bishai, chief executive of Orascom.

“We also generated positive operating cash flow in the second quarter of 2021, but not enough to compensate for the first quarter of 2021. That said, we are on the right trajectory and are working diligently to conclude the year on a positive note.”

The company has also made progress on an operational front and expects to deliver major projects in the remainder of the year, particularly in the water sector, he said.

Orascom signed new contracts worth $1.1bn in the second quarter of this year, an increase of about 57 per cent, which pushed its consolidated backlog for the first six months of the year to $5.87bn.

The signing of new projects in the second quarter was mainly driven by a pick-up in the US market, where it secured $790m in contracts. This accounted for the bulk of $885m reported for the first six months of 2021.

In Egypt, the group bagged $920m in new awards in the first half, out of which $350m were added in the second quarter of the year, driven by work across the water and industrial sectors.

“Egypt continues to provide us with an interesting pipeline of new opportunities that we expect to materialise during the second half of 2021,” the company said.

The stand-alone consolidated projects backlog of Belgian contractor Besix, in which Orascom Construction controls a 50 per cent stake, reached €4.2bn ($4.94bn) at the end of June.

New awards worth about €350m in the second quarter drove a 27.2 per cent rise in the company's total new projects during the first half to €1.4bn.

“Besix management continues to focus on turning around the business,” Mr Bishai said.

Strong fundamentals will drive Besix “along a profitable path for the remainder of the year.”