Egypt's OCI Q3 net up 24 per cent, matching consensus

Reuters, Monday 21 Nov 2011

Expansion in construction and fertiliser units drives a surge in profits for Egypt's largest listed firm

OCI said its construction unit's consolidated backlog expanded 13.6 per cent to $5.95 billion during the third quarter after it won new orders worth $1.42 billion (Reuters)

Egypt's Orascom Construction (OCI) boosted fertiliser exports as rivals focused on home markets, helping to lift third-quarter profit by 24 per cent, and gave an upbeat outlook as its construction unit extended its pipeline of orders.

Chief Executive Officer Nassef Sawiris said on Monday he expected OCI's fertilisers capacity to increase by 50 to 60 per cent in the coming two quarters, putting the company in a good position to meet an increase in world demand.

"Chinese exports are down significantly this year. They're consuming a lot of their own production," he said in an interview, adding that domestic consumption had increased in Russia and Ukraine as well, leaving them less to export.

Fertilisers, which accounted for 70 percent of earnings, before interest, taxation, depreciation and amortisation (EBITDA), was expanding, with capacity additions underway in Egypt, Algeria, the Netherlands and the United States, the company said.

OCI, the biggest company in Egypt by market value, said third-quarter consolidated net income rose to US$182.9 million, in line with expectations, from $147.5 million a year earlier.

"It's fair to assume that it's driven mostly by fertilisers," Sawiris said.

Consolidated revenue grew 8.9 per cent to $1.36 billion, while earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 40 percent to $371.3 million.

A Reuters poll of 15 analysts had on average forecast net income of $183.3 million, revenue of $1.34 billion and EBITDA of $357.8 million.

OCI, most of whose business is outside Egypt, was also negotiating new business for its construction unit and expected to expand its backlog further this quarter or in the first quarter of 2012, Sawiris said.

The company's construction backlog expanded by 13.6 percent to $5.95 billion during the third quarter after it won new orders worth $1.42 billion.

"The outlook is positive," Sawiris said. "We are optimistic on our prospects in Morocco, Iraq and then, by the end of 2012, maybe Libya."

OCI's business was unchanged in Egypt despite the country's popular uprising, but that it was taking a "wait-and-see approach", Sawiris said.

OCI said it had agreed to buy out the minority interests of its Pandora Methanol subsidiary in the United States.

Sawiris said OCI previously owned just over 50 per cent of Pandora. He declined to give a value for the transaction, but said it was under $100 million.

Pandora's 250,000-tonne ammonia unit is scheduled to begin production next week and its 750,000-tonne methanol unit in the second quarter of 2012.

OCI stock was suspended from Egypt's stock exchange for most of Monday but made minor losses when trading resumed. The benchmark index fell over 4 per cent by closing.

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