File photo: Orascom (Photo: Reuters)
Egypt's Orascom Construction Industries (OCI) is likely to report a sharp annual decline in second quarter profits on Thursday, stymied by falling margins in its fertiliser and building operations, say local business analysts.
A note from Cairo-based investment bank Beltone Financial on Wednesday forecast net profits for Egypt's largest-listed firm of $105 million, up 11.6 per cent on the first quarter but down 36.5 per cent year-on-year.
Beltone attributed the likely annual drop to increased operation costs and falling profit margins in OCI's two key sectors, fertiliser production and construction.
On a quarterly basis, however, Beltone predicts a slight climb, helped by the short-term improvement of fertiliser production margins spurred by recent, favourable prices for core materials urea and ammonia.
OCI's consolidated top-line for the second quarter may hit $1,389 million, says Beltone, reflecting quarter-on-quarter growth of 8.6 per cent, and a milder annual decline of 5.7 per cent.
In June, OCI said its Q1 bottom line had fallen to $94 million, a sharp drop on the $206.3 million it saw for the same period in 2011.
OCI, which plans to split its construction and fertiliser businesses into two new companies, has benefited from infrastructure growth across the Middle East despite economic turmoil at home.
Commenting on the first quarter fall in profits, OCI chief executive Nassif Sawiris said that a coming surge in fertiliser prices would likely spur a rebound in full-year earnings.