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Orascom Construction reports income of $26.4 m in 2Q2016

Orascom Construction reports income of $26.4 m in 2Q2016

Arab Finance: Orascom Construction Limited (ORAS) announced its financial results for the second quarter of 2016.

Orascom Construction declared CEO' statement, Osama Bishai, who said that the second quarter highlights our steady progress maintained throughout the first half of 2016. We are pleased with the timely execution of our sizable projects that continue to drive our financial performance this year. In parallel, we signed a number of key contracts that have propelled our backlog to a new high, providing us with significant visibility as we continue to selectively pursue new work.

Furthermore, our current backlog reflects our position as an integral player in the development of Egypt’s infrastructure. While the power sector in Egypt led our MENA backlog growth last year, our varied skillset and strong market presence have allowed us to capitalize on increased spending across other sectors.

Saudi Arabia remains a challenging market, but we continue to take prudent measures to limit our exposure there. Our focus in all MENA markets remains on quality projects where we have a competitive edge and are comfortable in the source of funding.

Our US subsidiaries, Weitz and Contrack Watts, are contributing healthily to our backlog, signing over $320 million in new awards during the second quarter excluding committed work. We continue to focus on enhancing this segment including potential investment opportunities.

BESIX has made a successful comeback in 2016, reporting higher backlog and improved profitability. We are also pleased to partner with BESIX on a new award for an LNG-receiving jetty in Ain El Sokhna, Egypt.

Consolidated Backlog

Consolidated backlog grew 4.8% to USD 7.5 billion. The Group concluded another strong quarter of new awards by signing contracts worth USD 2.2 billion mostly in Egypt and the USA. While new awards are lower compared to the previous year, which included Burullus and New Capital power plants, the current backlog level highlights the Group’s consistent order intake over a number of quarters.

MENA

Orascom added a number of strategic projects during Q2 2016. The Group is part of a joint venture currently building three tunnels stretching across the Suez Canal, and cemented its involvement in the Cairo Metro program where it is also well positioned for new phases. Furthermore, the Group is executing new road projects and is collaborating with BESIX on a new LNG-receiving jetty in Ain El Sokhna.

USA

Weitz and Contrack Watts’s combined backlog is up 17% compared to the level on 30 June 2015. Weitz in particular maintains its strong order intake momentum and is positioned to convert sizable committed work into backlog over the coming quarters, while Contrack Watts is poised to add additional work particularly in the Pacific Rim.

The Group continues to make significant progress at Iowa Fertilizer Company (IFCo) and Natgasoline. Completion of testing and pre-commissioning of the ammonia plant at IFCo is still planned for September while Natgasoline is currently at peak construction and is making excellent progress towards completion targets.

BESIX Group

Pro forma backlog including OC’s 50% share in BESIX rose 5.4% to USD 9.5 billion, as BESIX’s standalone backlog grew 8.5% to another high of EUR 3.6 billion.

BESIX maintained strong order intake throughout the year, signing new contracts amounting to approximately EUR 1.5 billion during H1 2016. These new awards span across a number of sectors in the Middle East and Europe including marine, water treatment, infrastructure and high-end commercial. In addition, BESIX and OC commenced work on a new award in Egypt, marking the third project on which both companies are currently collaborating.

Revenue increased 6.5% over the previous year to USD 1,997.0 million in H1 2016 and remained flat y-o-y during Q2 2016. EBITDA margin in the MENA region was healthy at 8.8% and 9.2% in the first half and the second quarter of 2016, respectively, highlighting steady progress in Egypt.

Contribution from BESIX improved to USD 7.5 million in Q2 2016 compared to USD 2.0 million in Q1 2016. Group net income increased 24.1% y-o-y increase in H1 2016.

The Group settled a sizable portion of its debt in Egypt, resulting in a net cash position of USD 299.0 million, and generated operating cash flow of USD 260.8 million during the first half of 2016.

 

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