Construction

Orascom Construction’s US revenue softens Mena decline

August 28, 2024

Cairo-based Orascom Construction reported a $7.7 billion order backlog, of which a record $1.9 billion are US orders

6.3% revenue drop to $711m
Backlog up to $7.7bn
Aviation and data projects in US

Egypt’s Orascom Construction has reported a decline in its second-quarter revenues after a 25 percent drop in Mena revenue was softened by growth in its US business.

Volatility in the value of the Egyptian currency also drove a decline in net profit for the Cairo-based company, from $92.8 million in the same period last year down to $20.9 million in Q2 2024.

The conglomerate, which is dually listed in the UAE and Egypt, said revenue fell 6.3 percent from $758.6 million in Q2 2023 to $711.1 million this year.

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For the six months between January and June, its 2024 revenue was nearly $1.48 billion, down 5.5 percent from $1.56 billion over the same period in 2023. Net profit went from $133 million in the first half of last year to $70.7 million this year.

Although the slide was concentrated in the Middle East and Africa business, an expansion of US operations helped to soften the blow.

The construction giant highlighted a “healthy” backlog, or future expected sales from existing projects, of $7.7 billion, up from $5.5 billion at the same time last year.

That base, chief executive Osama Bishai said, made it possible for Orascom to be “selective in pursuing new opportunities while maintaining our focus on project execution”.

Bishai also noted progress in the company’s planned geographic diversification, led by the US business. Its revenue grew from $662 million in the first six months of 2023 to $796 million in the same period in 2024.

Backlog there reached a record $1.9 billion at the end of June. The company clinched $990 million of new awards in the prior six months, focused in the data centre and aviation sectors, Orascom added.

In the US it owns Weitz Company in Iowa and Contrack Watts in Virginia, the latter a well-known contractor for the US military, as well as a 50 percent stake in Belgium-owned Besix.

In the Middle East and Africa, revenue dropped from $902 million to $681 million, or 25 percent from the first half of 2023 to the first half of 2024. The second quarter of this year was down an even bigger 29 percent on an annual basis to $321 million.

Orascom’s Mena operations made up 45 percent and 46 percent of overall revenue in Q2 2024 and H1 2024, respectively, the company said in the August 28 release.

“Revenue in Egypt was impacted by the devaluation of the pound but is expected to increase in H2 2024 as large infrastructure projects ramp up.”

Adjusted Ebitda rose nearly 30 percent year-on-year in the first half of the year, up to $75 million from $58 million in 2023. It was up 65 percent in the second quarter over the same quarter last year, the company reported.