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Egypt's OCI Q3 profit jumps on fertilizer boostqrcode

Nov. 22, 2011

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Nov. 22, 2011
Egypt's Orascom Construction (OCI) boosted fertiliser exports as rivals focused on home markets, helping to lift third-quarter profit by 24 percent, and gave an upbeat outlook as its construction unit extended its pipeline of orders.

Chief Executive Officer Nassef Sawiris said on Monday he expected OCI's fertilisers capacity to increase by 50 to 60 percent in the coming two quarters, putting the company in a good position to meet an increase in world demand.

"Chinese exports are down significantly this year. They're consuming a lot of their own production," he said in an interview, adding that domestic consumption had increased in Russia and Ukraine as well, leaving them less to export.

Fertilisers, which accounted for 70 percent of earnings, before interest, taxation, depreciation and amortisation (EBITDA), was expanding, with capacity additions underway in Egypt, Algeria, the Netherlands and the United States, the company said.

OCI, the biggest company in Egypt by market value, said third-quarter consolidated net income rose to $182.9 million, in line with expectations, from $147.5 million a year earlier.

"It's fair to assume that it's driven mostly by fertilisers," Sawiris said.

Consolidated revenue grew 8.9 percent to $1.36 billion, while earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 40 percent to $371.3 million.

A Reuters poll of 15 analysts had on average forecast net income of $183.3 million, revenue of $1.34 billion and EBITDA of $357.8 million.

OCI, most of whose business is outside Egypt, was also negotiating new business for its construction unit and expected to expand its backlog further this quarter or in the first quarter of 2012, Sawiris said.

The company's construction backlog expanded by 13.6 percent to $5.95 billion during the third quarter after it won new orders worth $1.42 billion.

"The outlook is positive," Sawiris said. "We are optimistic on our prospects in Morocco, Iraq and then, by the end of 2012, maybe Libya."

OCI's business was unchanged in Egypt despite the country's popular uprising, but that it was taking a "wait-and-see approach", Sawiris said.

OCI said it had agreed to buy out the minority interests of its Pandora Methanol subsidiary in the United States.

Sawiris said OCI previously owned just over 50 percent of Pandora. He declined to give a value for the transaction, but said it was under $100 million.

Pandora's 250,000-tonne ammonia unit is scheduled to begin production next week and its 750,000-tonne methanol unit in the second quarter of 2012.

OCI stock, which was suspended for most of Monday, just started trading was down 2 percent as of 1207 GMT, while the benchmark index was down 4 percent.
Source: Reuters

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