Orascom Construction Industries yesterday posted strong quarterly profits on the back of a buoyant fertiliser business, while analysts lauded the company's recovery in the construction sector.
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Net profit in the third quarter increased by 24 per cent to US$182 million (Dh668.4m) compared with the same period last year, with revenue growing by almost 9 per cent to $1.36 billion.
Orascom's fertiliser arm drove profits. The company ranks among the world's 10 largest producers of nitrogen-based fertilisers, and prices for its product increased by a quarter in just three months.
Whereas the company was able to draw on good market fundamentals to boost the profit margins of its fertiliser sales in the short term, the revival of fortunes of the construction business holds long-term promise.
The backlog in construction business grew by almost 14 per cent between July and September this year for Orascom, Egypt's biggest publicly listed builder, on growth in the previous three months. Prior to the second quarter, Orascom's backlog shrank for six successive quarters. Having increased the size of its order book in two consecutive quarters, the company appears to have turned a corner.
"The positive surprise comes from the fact that their construction backlog has risen for the second quarter," said Heidy Rehman, a senior analyst for Citigroup. Orascom's project pipeline now stands at $5.95bn.
The construction sector in the Middle East has become increasingly competitive, as contractors pile into the market to benefit from one of the few industries to experience growth.
In spite of increasingly fierce competition, Orascom's construction group posted an earnings before interest, tax, depreciation and amortisation (Ebitda) profit margin of 15.6 per cent.
"It is generally thought that if you want to win contracts in the [Middle East and North Africa] region, you have to compromise on price, but they are still publishing pretty decent margins," said Ms Rehman.
With Abu Dhabi reining in spending on infrastructure projects, the construction sector in the Middle East is likely to become even more competitive. The Egyptian firm is exposed to the UAE market through its 50 per cent stake in the construction company Besix Group. The Belgian builder has a significant presence in the UAE, where it helped construct the Ferrari World theme park on Yas Island, and is currently completing the Cleveland Clinic in Abu Dhabi.
Citigroup regards Saudi Arabia as the main driver of construction spending in the region, and Orascom could benefit from its partnership with Saudi Bin Laden.
Healthy profits and a comeback in the construction sector have not prevented Orascom's share price suffering from the political situation in Egypt, where a popular revolt deposed Hosni Mubarak as president in February.
The company's shares have lost 23 per cent of their value since the beginning of the year, as Egypt's benchmark EGX 30 Index shed 44 per cent of its worth. Government spending is in limbo as the country awaits elections.
Longer term, the country aims to invest heavily in infrastructure projects to boost employment and government popularity, providing opportunities for Orascom.
"Orascom is a market leader, it will win projects. Egypt will look to spend to create jobs," said Ms Rehman.
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Name: Hassan Mohsen Elhais
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The rules of the road keeping cyclists safe
Cyclists must wear a helmet, arm and knee pads
Have a white front-light and a back red-light on their bike
They must place a number plate with reflective light to the back of the bike to alert road-users
Avoid carrying weights that could cause the bike to lose balance
They must cycle on designated lanes and areas and ride safe on pavements to avoid bumping into pedestrians
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RESULT
Shabab Al Ahli Dubai 0 Al Ain 6
Al Ain: Caio (5', 73'), El Shahat (10'), Berg (65'), Khalil (83'), Al Ahbabi (90' 2)
Know before you go
- Jebel Akhdar is a two-hour drive from Muscat airport or a six-hour drive from Dubai. It’s impossible to visit by car unless you have a 4x4. Phone ahead to the hotel to arrange a transfer.
- If you’re driving, make sure your insurance covers Oman.
- By air: Budget airlines Air Arabia, Flydubai and SalamAir offer direct routes to Muscat from the UAE.
- Tourists from the Emirates (UAE nationals not included) must apply for an Omani visa online before arrival at evisa.rop.gov.om. The process typically takes several days.
- Flash floods are probable due to the terrain and a lack of drainage. Always check the weather before venturing into any canyons or other remote areas and identify a plan of escape that includes high ground, shelter and parking where your car won’t be overtaken by sudden downpours.
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Milestones on the road to union
1970
October 26: Bahrain withdraws from a proposal to create a federation of nine with the seven Trucial States and Qatar.
December: Ahmed Al Suwaidi visits New York to discuss potential UN membership.
1971
March 1: Alex Douglas Hume, Conservative foreign secretary confirms that Britain will leave the Gulf and “strongly supports” the creation of a Union of Arab Emirates.
July 12: Historic meeting at which Sheikh Zayed and Sheikh Rashid make a binding agreement to create what will become the UAE.
July 18: It is announced that the UAE will be formed from six emirates, with a proposed constitution signed. RAK is not yet part of the agreement.
August 6: The fifth anniversary of Sheikh Zayed becoming Ruler of Abu Dhabi, with official celebrations deferred until later in the year.
August 15: Bahrain becomes independent.
September 3: Qatar becomes independent.
November 23-25: Meeting with Sheikh Zayed and Sheikh Rashid and senior British officials to fix December 2 as date of creation of the UAE.
November 29: At 5.30pm Iranian forces seize the Greater and Lesser Tunbs by force.
November 30: Despite a power sharing agreement, Tehran takes full control of Abu Musa.
November 31: UK officials visit all six participating Emirates to formally end the Trucial States treaties
December 2: 11am, Dubai. New Supreme Council formally elects Sheikh Zayed as President. Treaty of Friendship signed with the UK. 11.30am. Flag raising ceremony at Union House and Al Manhal Palace in Abu Dhabi witnessed by Sheikh Khalifa, then Crown Prince of Abu Dhabi.
December 6: Arab League formally admits the UAE. The first British Ambassador presents his credentials to Sheikh Zayed.
December 9: UAE joins the United Nations.
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
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Dirham Stretcher tips for having a baby in the UAE
Selma Abdelhamid, the group's moderator, offers her guide to guide the cost of having a young family:
• Buy second hand stuff
They grow so fast. Don't get a second hand car seat though, unless you 100 per cent know it's not expired and hasn't been in an accident.
• Get a health card and vaccinate your child for free at government health centres
Ms Ma says she discovered this after spending thousands on vaccinations at private clinics.
• Join mum and baby coffee mornings provided by clinics, babysitting companies or nurseries.
Before joining baby classes ask for a free trial session. This way you will know if it's for you or not. You'll be surprised how great some classes are and how bad others are.
• Once baby is ready for solids, cook at home
Take the food with you in reusable pouches or jars. You'll save a fortune and you'll know exactly what you're feeding your child.
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Director: Goran Hugo Olsson
Rating: 5/5
Barbie
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The specs: Fenyr SuperSport
Price, base: Dh5.1 million
Engine: 3.8-litre twin-turbo flat-six
Transmission: Seven-speed automatic
Power: 800hp @ 7,100pm
Torque: 980Nm @ 4,000rpm
Fuel economy, combined: 13.5L / 100km
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Director: Neeraj Pandey
Rating: 2.5/5
The biog
Name: Sari Al Zubaidi
Occupation: co-founder of Cafe di Rosati
Age: 42
Marital status: single
Favourite drink: drip coffee V60
Favourite destination: Bali, Indonesia
Favourite book: 100 Years of Solitude