Orascom Construction Industries (OCI), Egypt’s largest listed company, reported on Tuesday a 22 percent rise in third-quarter net profit due to higher fertilizer prices and a pick-up in construction activity.
The building and fertilizer giant posted quarterly profit of $147.6 million, beating the $136.5 million average forecast in a Reuters poll but within the $123-$148.5 million range.
It noted a surge in global fertilizer prices and has been involved in an increased number of talks about new contracts.
"Global fertilizer prices have improved dramatically from their previous lows in July-August with selling prices for urea and ammonia currently around $400," OCI said on Tuesday.
"If it were not for the results, the stock would fall more on global (economic) concerns," Karim Hosny of Pharos Securities said.
Analysts say OCI will keep growing profits as global urea and ammonia prices continue to rise, increasing the portion of revenue contributed by its higher-margin fertilizer operations.
"Fertilizer prices have improved," said George Beshara, vice-president of Pharos Holding, adding prices for both were around $260-270 in the first two quarters. "I believe urea prices will continue to move positively."
Pharos expects OCI’s net profit to grow by more than one fifth in 2010 to $571 million, and sees revenue of $5.1 billion.
OCI said its construction arm secured $600 million of new work in the third quarter and $2.1 billion in the nine-month period, with infrastructure projects 58.3 percent of the total.
"The outlook for infrastructure awards in the region has improved and bidding activity in the sector has accelerated in the last few months," OCI said.
"In recent weeks, several public-private partnership (PPP) opportunities were launched by the Egyptian government which will be of interest to the construction group."
Its consolidated backlog of construction orders was $6 billion at the end of September, down 4.2 percent from the previous quarter.
Third-quarter revenue rose 34 percent year on year to $1.25 billion. Earnings before interest, taxes, depreciation and amortization (EBITDA) grew 31 percent to $266 million.
–Reuters
