CAIRO: Orascom Construction Industries (OCI), Egypt’s largest listed firm, posted a 76.1 percent rise in fourth-quarter net profit on Tuesday and was upbeat on its construction and fertilizer activities.
The group, which earned a net $186.0 million in the three months through Dec. 31, said prospects for construction awards continue to be positive and it expects fertilizer demand to remain "healthy" in the current year.
Prospects for Orascom Construction, whose two main activities each account for around half of its earnings, have been threatened by Egypt’s political turmoil but its London-quoted stock has rallied from lows seen earlier this year.
The firm’s shares in Egypt have not been traded for more than a month after authorities closed the bourse, but its London shares, which in early February fell to their lowest level in nearly two years, were up 1.3 percent at $36.11 by 1046 GMT.
OCI said it had been awarded about $50 million in contracts in Egypt in February, a month when political turmoil had disrupted much of the economy. It said it would bid for several large infrastructure and road projects in coming weeks.
New awards across the construction business totalled $550 million in the fourth quarter and $2.62 billion in all of 2010. Infrastructure work made up 63 percent of 2010 total new awards.
"Construction awards for the year were down from last year which doesn’t set a good stepping stone for 2011, because we are probably going to see some awards postponed," Omar Taha of Beltone Financial said.
Weeks of political unrest that toppled Egypt’s Hosni Mubarak inspired waves of protest across the Middle East, will likely delay the launch of several public private partnership projects (PPP), which OCI was a primary candidate to win, analysts say.
"The PPP pipeline is not yet clear for the year and that is a bit of a worry," said Taha.
Egypt said last week it may extend bid deadlines for four infrastructure projects worth LE 15 billion ($2.5 billion).
OCI said its total construction backlog fell 15.5 percent in 2010 to $5.62 billion, with infrastructure work making up 59 percent of the backlog. Some analysts had been looking for a higher figure to counter an expected drop in Egypt orders.
"You don’t know where revolution will strike next. It will all depend on politics for the short and medium term … I would have liked to go into 2011 with a higher backlog," Taha said.
OCI, which generated 71 percent of its construction revenue from outside of Egypt during the year, said building at its Sorfert Algeria project was 96 percent complete and commercial production was expected to start in the fourth quarter of 2011.
It said its fertilizer units in Egypt continued to produce as normal. "We expect fertilizer prices to remain healthy during 2011 with prices fluctuating based on regular seasonal variations in demand," Chairman and Chief Executive Officer Nassef Sawiris said in a statement accompanying the results.
The fertilizer unit sold over 1 million tons of nitrogen-based fertilizers during the quarter and about 3.7 million tons during the year.
Consolidated revenue increased 34.9 percent to $1.32 billion and earnings before interest, taxes, depreciation and amortization (EBITDA) rose 39.4 percent to $317.8 million.
The group will maintain its interim cash dividend of $1 per share to be paid out in April, the statement said. –Additional reporting by Patrick Werr and Shaimaa Fayed
