Orascom Construction Eyes Acquisitions as Second-Quarter Profit Jumps 41%
Orascom Construction Industries is looking at acquisitions after the Egyptian builder posted a better-than-expected second-quarter profit as it gained from the purchase of Royal DSM NV’s Agro and Melamine businesses.
Net income increased to $144 million from $102.3 million a year earlier, the Cairo-based company said in a statement on its website today. That beat the $130.79 million median estimate of three analysts, according to data compiled by Bloomberg.
Royal DSM agreed in March to sell two unprofitable agrochemical businesses to Orascom Construction for 310 million euros ($418 million), allowing the Egyptian company to acquire additional customers for fertilizers in Europe. Sales in the second-quarter rose 23 percent to $1.1 billion, the country’s biggest publicly traded builder said today.
“We are looking at opportunities particularly in the field of fertilizers,” Nassef Sawiris, chairman and chief executive officer of Orascom Construction, said by telephone after the results were released. “We will not go after anything huge, but we will look at acquisitions that are swallowable.”
Sawiris said fertilizer prices were expected to remain “firm” for the rest of the year after rising in July and August.
Orascom secured $678 million in new construction work in the second quarter and expects strong demand for infrastructure projects in the Middle East, especially after electricity blackouts in the region this month, Sawiris said. Infrastructure work accounted for 64 percent of the construction group’s $6.3 billion backlog, the company said in the statement.
“We think there will be another round of power works, a major round of water projects and there will be a major round of road works,” Sawiris said. The company will also bid for tenders in the fourth-quarter after new legislation for Public-Private- Partnerships in Egypt, he added.
The shares gained 1.2 percent to 256.32 Egyptian pounds at the 1:30 p.m. close in Cairo, valuing the company at 53 billion Egyptian pounds ($9.3 billion). The stock has advanced 2.7 percent this year, compared with a 4.2 percent increase in the benchmark EGX 30 Index.
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