Egypt's Orascom Construction said it has registered a net loss of $334.4 million for the financial year 2015 mainly due to a major setback in its US business and expects to return to profitability in this quarter.
 
A leading engineering and construction contractor primarily focused on infrastructure, industrial and high-end commercial projects in the Middle East and North Africa (Mena) and the US, said it was spun off from Netherlands-based OCI in March and thus has no previous comparative figures.

Announcing the results, Orascom Construction said the consolidated backlog grew 14 per cent year on year (y-o-y) to $6.7 billion as of 31 December 2015, providing the group with sufficient revenue and profitability coverage.

The group delivered another strong year of new awards backed by key projects in the Middle East and North Africa (Mena) and US totalling $4.8 billion.

Mena ebitda (earnings before interest, taxes, depreciation, and amortisation) margin of 15.4 per cent and a net income of $175.8 million highlighted the strength of the group’s regional operations, the Egyptian group said in its statement.

It had a net cash position of $135.5 million as of 31 December 2015 and operating cash flow of $201.2 million generated in 2015.

On its Mena projects, Orascom Construction said it had signed new contracts across the infrastructure sector in Egypt during the fourth quarter. The company said it remained focused on completing its existing projects in Saudi Arabia while only pursuing new projects on a selective basis.  

On the 2015 results, the construction major said it was pleased with the performance in the Mena region where it generated healthy profits and cash flow.

The company is currently executing a number of landmark infrastructure projects, including almost 10,400 MW of combined cycle power projects and three tunnels below the Suez Canal in Egypt.

"While we are facing a challenging market environment in Saudi Arabia that has affected our project execution and profitability, we are working on mitigating our exposure there and are focused on executing our current projects while remaining selective on new opportunities," said the company spokesman.

Orascom's US subsidiaries Weitz and Contrack Watts continue to expand in-line with its strategy to increase the group's US presence to create additional value to shareholders at no expense of the Mena growth.

The combined backlog of both entities in the US grew 40 per cent in 2015 to represent 21 per cent of our consolidated backlog. Weitz in particular signed $1.2 billion in new awards in 2015 compared to $626 million in 2014 as it capitalised on a rebounding US market and targeted larger projects.

"On the other hand, certain challenges related to the construction of Iowa Fertilizer Company (IFCo) have weighed on our financial performance this year, overshadowing the success of other major parts of the business," said the spokesman.

"Furthermore, we continue to work on creating a sustainable concessions portfolio alongside our EPC (engineering, procurement and construction), building materials and property management business units to support our long-term growth and provide additional recurring cash flows," he noted.

"While our investment efforts have been mostly focused on infrastructure projects in Egypt, where we are progressing on power and water projects, we are also exploring potential concession opportunities
in other markets, particularly the US where we are working on replicating our Mena strategy," he added.

Looking ahead, Orsacom said it expects to hits profitability in 2016, starting with the first quarter which already indicates revenue in the range of $900 million and positive consolidated ebitda.-TradeArabia News Service