CAIRO: Orascom Construction Industries (OCI), Egypt’s largest builder by market value, said on Thursday second-quarter net income from continuing operations more than tripled to $239.5 million.
The figure was substantially higher than forecasts by brokerages EFG-Hermes, which predicted net income of $175.9 million, and Beltone Financial, which forecast net income of $190 million to $200 million.
OCI Chairman Nassef Sawiris said the company, which specializes in big construction projects in the Middle East and North Africa and has recently expanded its fertilizer business, was still seeing strong demand for infrastructure in the Middle East and had benefited from higher world prices for fertilizers.
“Economic slowdown in the Middle East is a word that’s not in the current vocabulary, he told Reuters in a telephone interview. “Infrastructure is lagging behind development.
“To catch up with economic growth, infrastructure is the biggest driver, he added.
Sawiris said OCI was about to complete the process of setting up a $1 billion five-year syndicated standby credit facility led by Citigroup.
The credit could be used for acquisitions but also for greenfield expansion and adding new products, he said.
“We are going to use it opportunistically. We are not in a hurry. We are going to do anything that we think is consistent with our historic return on equity, he added.
On fertilizer operations, the company said in a statement the average selling price for its Egyptian production rose 26 percent from the first quarter to $515 per ton of urea.
“The outlook (for prices) for the remainder of 2008 is significantly stronger, driven in part by strong demand from Asia and growing product scarcity in the export market, it added.
“Global conditions for fertilizers in the short and medium term are very positive, Sawiris said.
OCI has more fertilizer production coming on line in the last quarter of 2008 – a 700,000 ton/year ammonia plant in Egypt and a 500,000 ton/year plant in Nigeria which has been under renovation, it said.
It also has a stake in a 2 million ton/year fertiliser complex being built in Algeria, which should start operating by the end of 2010, Sawiris said.
OCI’s earnings before interest, tax, depreciation and amortisation (EBITDA) rose 146 percent in the second quarter to $258.7 million.
The consolidated backlog of construction orders reached a record of $7 billion in the period, twice what it was a year ago. New construction contracts in the first half of 2008 more than doubled to $3.87 billion, the company said.