ODH blames 2011 revenue shortfalls on Egypt unrest

Ahram Online, Friday 30 Mar 2012

Orascom Development Holding (ODH)attributes last year's staggering revenue decreases to ongoing political turbulence

El-Gouna resort on the Red Sea is one of OHD's main revenue generators

Orascom Development Holding (ODH) realised net losses of CHF70 million ($77 million) in 2011, down from CHF95 million in net profits one year earlier, the company announced on Thursday.

ODH attributed the large drop in its bottom line to "political events in the Middle East and North Africa region and extraordinary transactions."

Total revenue, meanwhile, saw a 50 per cent decrease to CHF256 million. ODH's hotel segment, which accounts for 53 per cent of the group's total income, remained profitable in 2011, but witnessed a 29 per cent decline in revenue. The segment's EBITDA dropped by a half over the same period to reach CHF31 million.

The reason for the decrease, according to ODH, was a full month with virtually zero occupancy at Egypt's Gouna and Taba Heights projects, as well as a shift among hotel guests from five-star hotels to their four-star counterparts.

The group's occupancy rates reached 56 per cent, meanwhile, down from 76 per cent in 2010. This was mainly due to a drop in room occupancies in Egypt following the Tahrir Square uprising early last year.

Similarly, the group's real estate and constructions segment, which accounts for 26 per cent of total proceeds, witnessed a whopping 71 per cent drop in revenue. ODH attributed the decrease to a 50-day halt in local construction activity, along with waning demand for homes in the MENA region.

ODH incurred extraordinary items totalling CHF83 million in 2011, including provisions (CHF 57 million), revaluations of investment properties (CHF9 million), and currency revaluations due to the appreciation of the Swiss Franc (CHF12 million).

Accordingly, when normalising earnings before interest, taxes, depreciation and amortisation (EBITDA) for unusual items, the amount increases to CHF43 million, up from CHF40 million in losses.

Shares in ODH closed at LE6.05 each in Thursday trading.

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