Egyptian builder blames currency turmoil for revenue slump

Orascom

• Orascom revenue down 19%
• 5.5% rise if forex impact is excluded
• Contract awards up sharply in 2023

Egyptian construction giant Orascom has reported a 19 percent decline in revenue to about $3.4 billion last year, attributing most of the drop to the devaluation of the Egyptian pound.

Orascom said that without the country’s foreign exchange issues, it would have reported a 5.5 percent increase in revenue compared to 2022, after completing a number of large projects. 

The pound has lost more than two-thirds of its value against the dollar since early 2022. On Monday the official rate for $1 stood at EGP47.

The Egyptian central bank said earlier this month that it plans to allow the exchange rate to be determined by market forces. 

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Orascom said the Middle East and Africa contributed nearly 65 percent of its revenue last year. Operations in the US accounted for the rest.

Its contracts in the Middle East and Africa were mostly large infrastructure and commercial projects. Its US workload was a mix of commercial, infrastructure and light industrial. 

CEO Osama Bishai said contract awards increased by 59 percent in 2023 to nearly $6 billion. This led to its backlog rising 46 percent to $8 billion. 

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Egypt and the UAE accounted for 55 percent and 11 percent of contract awards respectively. The remaining 34 percent is in the US.

The contractor has won a number of transport projects in Egypt, including a regional metro system in Alexandria and Line 4 of the Greater Cairo Metro. 

Orascom is also working on the Grand Egyptian Museum, in addition to being in the final testing and commissioning phase of the 93,000-seat national stadium that will be part of Egypt International Olympic City in the country’s new capital. 

Last year the company completed its packages on Line 3 Phase 4B of the Greater Cairo Metro, stretching over 11km.

It is also working on Cairo Monorail, which is expected to be the world’s longest monorail, and the high-speed rail line that will link Sokhna to Marsa Matrouh. 

“In the US, we are migrating to focus on a better quality of projects mix, mainly across aviation, data centres and industrial projects,” said Bishai in Orascom’s annual report.

Earlier this month, it was announced that Egypt would receive an $8 billion loan from the International Monetary Fund after agreeing to implement reforms.

In total, Egypt’s international partners have pledged almost $60 billion in loans, grants and investments. This includes a $35 billion investment in Egypt’s “largest new city” by UAE sovereign fund ADQ.