Dubai-listed builder says net earnings fall to $22.4m in quarter as US losses widen 47.6 per cent
Orascom Construction third-quarter net income slips 13.8 per cent
Orascom Construction, an Egyptian Dubai-listed builder, said third-quarter net income fell 13.8 per cent as losses from its operations in the US outweighed gains from those in the Middle East and North Africa that have become more profitable amid an increase in government infrastructure spending.
Net income attributable to shareholders dropped to US$22.4 million in the three months ended September 30 compared with $26m in the corresponding period last year. Losses from the company's business in the US widened by 47.6 per cent in the period to $38.2m from $25.9m in the same period a year earlier.
"In Egypt, we reinforced our role as a leading player in the development of Egypt's infrastructure and new cities as we signed several new projects including a wastewater treatment plant that will serve 6 million people and the landmark cultural centre in the New Administrative Capital," said Osama Bishai, the company's chief executive.
In the Mena region, the company saw a 21 per cent increase in net income to $44m in the third quarter from $36.4m in the corresponding period last year, boosted by new business in Egypt where the company has traditionally conducted a big part of its business.
During the first nine months of the year, Orascom Construction added about $1 billion of new awards in Egypt in fields including transportation, power and water treatment, as well as for the New Administrative Capital and New Alamein City. In the third quarter in Egypt, the company was awarded projects to the tune of $550m.
In all, the company said it added $800 million of new projects in Mena and the US during the third quarter. It did not give a reason, however, for the widening loss from its US business during the quarter.
Orascom said, though, it had started initiatives to restructure its US operations to improve cost efficiencies. It also said its US subsidiaries Weitz and Contrack Watts had seen a pick-up in activity and had signed contracts worth more than $250m during the third quarter.
"Weitz successfully converted sizeable committed work into backlog while Contrack Watts capitalised on new opportunities in the federal market businesses," Mr Bishai said.