Egypt-based Orascom Construction reported a 17 per cent drop in net profit during the first quarter of 2020 despite a rise in revenue.
Net profit attributable to shareholders fell to $25 million (Dh91.81m) from the same period a year ago, the company said in a statement on Thursday. Profits were hit due to losses at Besix, the contractor in which it has a 50 per cent stake, which "was impacted by negative adjustments on some of its projects". Revenue climbed 17.2 per cent year-on-year to $827.6m, due to growth in its Middle East operations.
New awards increased 24.7 per cent year-on-year to $599.2m during the first quarter.
“Our first quarter 2020 results build on the operational and financial health of the group displayed in the 2019 financial year and strengthen our position as we face a more challenging environment impacted by Covid-19,” Osama Bishai, chief executive of Orascom, said.
“Our resilient backlog and net cash levels are also two key items that provide us with additional support during this period.”
The company’s net cash position was $114.3m at the end of the first quarter and the backlog stood at $5.4 billion.
“We have further reinforced our focus on important elements of our business such as project execution and controls, cash preservation and collection and cost optimisation. In addition, our past repeated experiences of managing and succeeding during uncertainty has helped prepare us to address the current environment," Mr Bishai said.
Orascom signed new awards worth $335m in the Middle East during the first quarter of 2020 and expanded its presence across a number of sectors such as infrastructure, wastewater treatment, railway, roads and data centres.
During the quarter, the company was awarded the modification, renewal, installation, and maintenance of the Banha-Port Said railway lines in Egypt stretching across 45 kilometres of trackwork and signalling, it said. Orascom Construction is also part of a consortium to build the first independent sewage treatment plant concession in Saudi Arabia.
In the US, the company’s subsidiaries signed $265m of new awards during the quarter, up 14 per cent year-on-year.
Orascom said its shareholders approved a dividend distribution of $0.21 per share at the annual general meeting held earlier this week.
The company, which developed a task force to deal with Covid-19, said work was briefly halted across some of its projects during the second quarter for a disinfection round.
"The impact related to Covid-19 was minimal in the first quarter of 2020 and is expected to be reflected in the second quarter 2020 results," Orascom noted.
Updated: May 21, 2020 09:38 PM