CAIRO: Egypt s top listed builder and fertilizer maker Orascom Construction Industries (OCI) posted a sharp drop in net profit but beat forecasts, sending its shares higher on Monday.
The company expects fertilizer markets to drive its growth in the next year, and is considering bidding for Brazilian fertilizer maker Copebras and licenses to produce fertilizer in India, Chief Executive Officer Nassef Sawiris said in an interview.
We ll consider all kinds of investments, from the Indian initiatives to even Copebras in Brazil, he said. These are some of the opportunities that we ll evaluate when they come out in the market.
The company s ammonia production will also increase by 30 percent in the fourth quarter, as its subsidiary Egypt Basic Industries Corporation regains capacity, he said.
The firm s shares gained 3.2 percent to LE 230 ($42.15) by 1140 GMT. The benchmark index was up 1.3 percent.
OCI said in its results statement that net profit for the third quarter reached $120.7 million, versus a range of $91.8 to $115 million offered by 10 analysts polled by Reuters.
It posted EBITDA for the quarter of $203.5 million, beating an average forecast of $192.9 million.
Overall, I think it looks pretty good. Construction seems to be holding up, and there s a good margin, said Credit Suisse analyst Hans Zayed. Everything is in line except for the net financing.
The net cost of the firm s financing fell to $14.3 million, compared to $27.8 million in the third quarter last year.
OCI s quarterly revenue fell to $933.4 million from $991.9 million a year ago, on the back of construction billing volatility, the company said.
Infrastructure work constituted 59.5 percent of the firm s construction backlog for the first nine months of 2009, versus 39.8 percent during the same period last year, the report added.
The biggest driver is still government-led infrastructure, Sawiris said. The (Middle East and North Africa) region is still lacking in infrastructure .
Analysts had forecast that OCI s third quarter revenue would grow largely on the strength of its construction wing, which is less profitable than its fertilizer operations.
Sawiris said that higher prices for corn, soy and other agricultural products were encouraging farmers to buy fertilizer, pushing prices up.
He said he expected this trend would continue, and was eyeing investments to expand the company s fertilizer operations over the next year.
Asked why Copebras, which is owned by mining group Anglo American, might prove attractive, Sawiris said: It s a significant ammonia consumer – so that s the interesting part.
Analysts had valued Copebras at around $580 million in October, after Anglo said it would sell it off as part of a broad restructuring.
