Cairo, Egypt / August 28, 2008, 09:30 AM
OCI Announces Record Q2 2008 Results
Summary of Consolidated Results for the Second Quarter:
- Consolidated revenue grew 57.5% to USUSD 1,013.3 million (LE 5,542.5
million) versus USUSD 643.5 million (LE 3,670.2 million) in Q2 2007
- EBITDA rose 146.1% to USUSD 258.7 million (LE 1,414.9 million) versus
USUSD 105.1 million (LE 599.6 million) in Q2 2007
- Consolidated EBITDA margin increased by 920bps to 25.5% versus
16.3% in Q2 2007
- Net Income from continuing operations grew 220.2% to USUSD 239.5
million (LE 1,309.8 million) versus USUSD 74.8 million (LE 426.5
million) in Q2 2007
- Consolidated backlog reached a record USUSD 7 billion, reflecting
growth of 49.0% over the backlog as at December 31 2007 and 103.0%
growth over the same time last year
Summary of Consolidated Results for the First Half Ended 30 June 2008:
- Consolidated revenue grew 48.7% to USUSD 1,766.8 million
(LE 9,664.4 million) versus USUSD 1,187.9 million
(LE 6,774.4 million) in H1 2007
- EBITDA rose 114.0% to USUSD 423.3 million (LE 2,315.2 million) versus
USUSD 197.8 million (LE 1,127.9 million) in H1 2007
- Net income from continuing operations increased 206.0% to
USUSD 439.2 million (LE 2,402.5 million) versus USUSD 143.5 million
(LE 818.7 million) in H1 2007
- Consolidated EBITDA margin of 24.0%
Statement from the Chief Executive Officer - Nassef Sawiris
Orascom Construction Industries (OCI) has reported record second
quarter. Our second quarter witnessed a strong rise from the previous
first quarter with 52.5% growth in EBITDA and 21.3% growth in net
income, reflecting rapidly improving fundamentals in the fertilizer
sector and accelerated performance by our Construction Group. During
the second quarter, EBITDA and net income from continuing operations
increased 146.1% and 220.2% respectively compared to the same quarter
last year. Also during the quarter, our consolidated SG&A dropped
200bps to a more steady-state level.
In May 2008, the Egyptian Government introduced a 20% corporate income
tax on free zone companies including our wholly owned subsidiary
Egyptian Fertilizer Company (EFC). The second quarter results
already reflect tax provisions as per the new regulations.
In Algeria, we view the recently announced investment regulations as
being positively aligned with our strategy to expand our investments
in Algeria. The decrease in corporate income tax to 19% down from 25%
positively impacts our profitability starting with
2008. Algeria comprises 22% of the Construction Group backlog.
The Construction Group reported a robust second quarter. Rising
billing on newer higher-margin projects and the effect of better cost
escalation measures in our construction contracts contributed to a
170bps margin improvement during the second quarter alone. The
consolidated construction work backlog reached a record USUSD 7 billion
as at June 30 2008 reflecting a 3% rise from the previous quarter and
more than double (103%) the backlog reported during the same time last
year. During the first half of 2008, new awards totaled USUSD 3.87
billion, representing a 107% increase over the same period last year.
In addition to the reported June backlog, the Construction Group has
also secured several new milestone projects across the region which
shall be included in the official September backlog. In the United Arab
Emirates, BESIX, in joint venture with Alstom, secured a USUSD 400
million for the Dubai-Al Safooh (Metro) Transit System. Also in the
UAE, a BESIX / Veiolia joint venture secured a EUR 525 million BOOT
contract for a wastewater plant in Abu Dhabi. In Algeria, OCI has
secured several strategic award packages on the KBR managed Skikda LNG
program during the second quarter.
Also during the quarter, OCI established a new construction joint
venture in Abu Dhabi - UAE in partnership with Hydra Commercial
Investments, Sorouh Real Estate and Capital Investment, an Abu
Dhabi-based firm. The company will specialize in geotechnical
engineering and foundation works with an aim to cater to
the noticeable shortage in piling and foundation works in the Middle
East construction market. The new subsidiary enhances the Construction
Group's vertical integration.
During the second quarter, the Fertilizer Group benefited from a
significant rise in the global prices for nitrogen-based fertilizers.
The average selling price for Egyptian Fertilizers Company (EFC) rose
26% to USUSD 515 per ton urea on a Freight-on-Board (FOB) basis, compared
to the average price for the first quarter. The outlook for the
remainder of 2008 is significantly stronger driven in part by strong
demand from Asia and growing product scarcity in the export
market. Egyptian Basic Industries (EBIC) continues to be on track for
commissioning its 0.7 mtpa greenfield ammonia plant during Q4 2008. The
Kellog Brown & Root (KBR) / OCI construction consortium has already
started their demobilization. Sorfert Algeria continues to make
milestone progress with construction well underway of its 2 mtpa
nitrogen-based fertilizer complex. The project finance debt has been
fully arranged and disbursement has commenced confirming target
completion dates. Notore Chemical Industries Ltd (NCIL)
in Nigeria expects to complete rehabilitation program of its 0.5
mtpa nitrogen-based fertilizer plant in southeast Nigeria during Q4
2008. In July 2008, OCI acquired a 20% stake in the Gavilon Group LLC
(Gavilon) for a total consideration of USUSD 340 million. Gavilon
provides physical distribution, merchandising and
trading services across basic agricultural inputs and outputs,
including fertilizer products, grains, feed ingredients and energy
products. The Group's fertilizer unit is the second largest distributor
and the largest independent importer of fertilizer into the United
States with 7.1 million tons of fertilizer products sold during fiscal
year 2007. First fertilizer shipments to Gavilon from EFC are currently
planned for the third quarter 2008.
The Board of Directors has proposed to re-introduce interim cash
dividend distributions going forward. OCI will convene a general
assembly on 30 August to seek approval from shareholders. We believe
the proposed policy change is consistent with rising cash flow
generation and would improve returns for shareholders.
OCI continues to selectively pursue new investment growth and
integration-driven opportunities across its core activities. Management
is actively engaged in the review of several potential projects and
partnerships. With our businesses continuing to benefit from strong
demand for their services and products, we believe we are poised for a
solid year. We expect the construction / fertilizer combination in 2008
to outperform the construction / cement combination in 2007.
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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