(Corrects Gavilon investment income in 8th paragraph.)
Orascom Construction Industries (OCIC), the biggest publicly traded builder in the Middle East, said first- quarter profit jumped 77 percent, boosted by higher fertilizer sales at its OCI Nitrogen unit.
Net income rose to $206.1 million from $116.5 million a year earlier, the Cairo-based company said in an e-mailed statement today. Sales increased 28 percent to $1.26 billion.
“We expect fertilizer prices to remain firm,” Nassef Sawiris, chairman and chief executive officer of Orascom Construction, said in the statement. “Rising coal prices in China have pushed Chinese production cash costs higher which in turn have raised the global floor of urea prices.”
Orascom’s fertilizer group sold 1.1 million tons of nitrogen-based fertilizers in the first quarter compared with 0.47 million tons a year earlier, the company said. Netback ammonia and calcium ammonium nitrate prices increased 22 percent and 38 percent respectively, Orascom said.
The financial contribution of OCI Nitrogen, previously called Royal DSM, wasn’t included in first-quarter financial results last year because of the timing of the closing of the unit’s purchase, the company said.
Orascom’s expansion of a calcium ammonium nitrate line in the Netherlands is expected to be in full production during 2012, adding about 300,000 tons, or 25 percent, of additional capacity, according to the statement. Sofert Algeria, the Algerian unit, was 96.4 percent completed at the end of March, with commercial production due to start in the fourth quarter.
“We are analyzing some greenfield operations in emerging markets at the moment,” Sawiris said in a telephone interview today.
First-quarter income from Orascom’s investment in Gavilon rose to $25.5 million from $14.1 million in the fourth quarter, the company said. Orascom bought a 20 percent stake in Gavilon for $340 million in July 2008 to bolster its fertilizer and agricultural supply business.
Orascom’s construction group secured $330 million of construction work in the quarter and is the preferred bidder for as much as $1 billion of projects.
“Despite political unrest in our key regional markets during the quarter, we feel confident that infrastructure spending will continue to accelerate in order to stimulate these markets’ economies and create immediate employment,” Sawiris said.
Shares of Orascom rose 2.1 percent to 246 Egyptian pounds as of 11:21 a.m. in Cairo, valuing the company at 50.9 billion pounds ($8.57 billion).
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