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Orascom Construction hurt by Egypt's political changes

Reuters, Thursday 7 Apr 2011

Delays in project tendering and review of gas supply contracts in Egypt and Algeria likely to hit Egyptian giant's profit margins

Orascom Construction Industries faces potential delays in project tendering in the immediate future due to the recent unrest in Egypt, investment bank UBS said, and cut its price target on the building and fertiliser giant's stock.

Orascom Construction's long-term gas supply contracts in Egypt and Algeria are also at risk of being reviewed, given the political changes in Egypt, and this could hurt the company's fertilizer segment margins, UBS said.

The brokerage, however, expects the segment to benefit from strong pricing and new capacity.

The brokerage cut its price target on Orascom Construction stock to 264.20 Egyptian pounds (LE) from LE291.40, but maintained its "neutral" rating.

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