Results as at 30 September 2008
Cairo, Egypt / November 18, 2008, 09:30 AM
CONSTRUCTION BACKLOG GROWS to RECORD VALUE of USD 7.6 billion
on BACK of REGIONAL INFRASTRUCTURE SPENDING
Summary of Consolidated Results for the 9M 2008 Ended
30 September 2008:
- Consolidated revenue grew 54.4% to USD 2,713.3 million
(LE 14,723.6 million) versus USD 1,756.9 million
(LE 10,005.1 million) in 9M 2007 which excludes the divested cement
operations*
- EBITDA rose 129.4% to USD 733.8 million (LE 3,982.0 million) versus
USD 319.9 million (LE 1,821.9 million) in 9M 2007
- Net income from continued operations increased 230.6% to
USD 647.9 million (LE 3,515.8 million) versus USD 196.0 million
(LE 1,115.9 million) in 9M 2007
- Net Income including discontinued operations was USD 913.0
(LE 4,954.2 million)
- Consolidated EBITDA margin of 27.0%
Summary of Consolidated Results for the Third Quarter:
- Consolidated revenue grew 74.9% to USD 991.9 million
(LE 5,382.6 million) versus USD 567.3 million (LE 3,230.4 million)
in Q3 2007
- EBITDA rose 152.0% to USD 307.2 million (LE 1,667.0 million) versus
USD 121.9 million (LE 694.1 million) in Q3 2007
- Consolidated EBITDA margin increased by 950bps to 31.0%
versus 21.5% in Q3 2007
- Consolidated backlog reached a record USD 7.61 billion, reflecting
growth of 60.5% over the backlog as at December 31 2007 and 8.8%
higher than the previous quarter
- Net Income grew 293.3% to USD 205.1 million (LE 1,113.4 million)
versus USD 52.2 million (LE 297.0 million) in Q3 2007
*All 2007 comparison figures are excluding the divested cement
operations
Statement from the Chief Executive Officer - Nassef Sawiris
Orascom Construction Industries (OCI) continues to generate strong
results during 2008. Amid the current turbulent conditions in global
financial markets OCI continues to create value for its shareholders
and record solid returns with a reported annualized Return on Equity
(ROE) of 38% for the year-to-date.
The Construction Group reported a robust third quarter. The
consolidated construction work backlog reached a record USD 7.6 billion
as at 30 September 2008 reflecting a net USD 0.6 billion rise from the
previous quarter and more than double the backlog reported during the
same time last year. During the third quarter, new awards totaled
USD 1.2 billion bringing the total year-to-date figure to a record
USD 5 billion of which 71% is infrastructure and large-scale
industrial projects. We continue to expect growth in infrastructure
work in the MENA region reflecting new fiscal stimulus packages by
regional governments which predominantly target acceleration in
infrastructure spending. The Construction Group is well-positioned to
benefit from such infrastructure focus and already has approximately
USD 650 million of new infrastructure work under final negotiations
that have not been reflected in the construction backlog. The
Construction Group reported a steady EBITDA margin of 13.2% for the
nine months ended 30 September 2008 on the backdrop of a peak
inflationary climate during the reported period, which have since
receded on the back of a global decline in commodity and material
prices. This bodes well for the profitability of our Construction Group
backlog.
The Fertilizer Group continues to benefit form being one the most
efficient and lowest cost producers in the world. Our competitive cost
structure has enabled us to weather severe volatility in selling
prices. During the third quarter, the Group witnessed exceptionally
high fertilizer prices and reported an average selling price which is
60% higher than the first half of 2008. As a result of tight credit
availability, fertilizer prices have come off their all-time peaks in
recent months and have declined to their Q1 2008 levels.
During the last few weeks, several major producers announced the shut-
down of plants with high production costs in Italy, Netherlands,
France, and several Eastern European countries, which will positively
impact the future demand/supply dynamics. The market continues to
witness tough credit conditions for both international traders and
farmers which are affecting fertilizer buying patterns. Nevertheless,
we are still positive about the long-term fundamentals of this sector
and the need to sustain high crop yields and plantings as per repeat
warnings of the United Nation's Food & Agricultural Organization in
regard to dangerous drops in global food stock in 2009.
Our commissioning pipeline remains on track. Egypt Basic
Industries Corporation (EBIC) is in the process of commissioning its
0.7 mtpa greenfield ammonia plant during Q4 2008. The Kellog Brown &
Root (KBR) / OCI construction team has completed their demobilization.
Sorfert Algeria continues to make milestone progress with construction
well underway of its 2 mtpa nitrogen-based fertilizer complex. Notore
Chemical Industries Ltd (NCIL) in Nigeria expects to enter the
commissioning phase of its 0.5 mtpa nitrogen-based fertilizer plant in
southeast Nigeria during Q4 2008. Beyond our commitments to the
Algerian ammonia / urea greenfield, we are limiting our 2009
new capital expenditure plans for the Fertilizer Group in order to
focus on potential acquisition opportunities in the sector. We intend
to intelligently execute phased product diversification including the
introduction of Urea Ammonium Nitrates (UAN) and non-integrated
Di-Ammonium Phosphates (DAP) at an estimated capital expenditure of
approximately USUSD 60 million. These investments can be a platform for
larger scale expansions in the future in both product groups but offer
a larger range of products to our client base as soon as possible.
Discussions on phosphate mining continue to progress
in Egypt and Algeria.
We believe OCI's cash-strong balance sheet uniquely positions us to
pursue a wide range of potential investment opportunities. We have been
able to secure a USD 736.5 million loan facility at an extremely
competitive cost, which brings our cash position to over a USD 1
billion earmarked for new potential investments. We intend to subject
new investment opportunities in both existing core activities and
potential new sectors to strict investment criteria. Given
the current investment climate characterized by scarce availability of
capital, we are targeting investment opportunities that will
achieve returns to shareholders that significantly exceed our
historical ROE. Additionally, we have decided to extend the share
buyback program till end of 2009 to allow for flexible allocation of
cash towards attractive investments.
For additional information contact:
OCI Investor Relations Department: For additional information on OCI:
Omar Darwazah Orascom Construction Industries
Email: omar.darwazah@orascomci.com (OCI)
Nile City Towers - South Tower
2005A Corniche El Nil
Ahmed Sultan Cairo, Egypt
Email: ahmed.sultan@orascomci.com www.orascomci.com
Tel: +202 2461 1036/0727/0914
Fax: +202 2461 9409 OCI stock symbols: OCIC.CA / ORCI
EY / OCICqL / ORSD
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