Property News · April 25, 2016

Dubai-listed Orascom Construction in $334m Q1 loss


Orascom Construction declared a net loss of US$334.4 million during its first year as an independent company, which it blamed on a one-off loss on a project to build a huge fertiliser plant in Iowa in the US.The Nasdaq Dubai-listed contractor, which was formally demerged from its Netherlands-listed chemicals and fertiliser group in March 2015, declared revenue of $3.9 billion for 2015 – $2bn of which was earned from the Mena region, with the rest coming from operations in the US.The company’s chief executive, Osama Bishai, said in a statement that rising costs at the $2bn Iowa Fertiliser Company (IFCo) plant being built for its former parent OCI NV “have weighed on our financial performance this year, overshadowing the success of other major parts of the business”.”At the same time, we have worked to mitigate the challenging issues at IFCo to avoid further losses,” it said in a statement.Reports in the US have said that the company is being sued by a contractor in relation to the IFCo project. A company called Maintenance Enterprises claimed that Orascom Construction stopped paying the company in October last year, and owes it more than $50m. Other contractors are also understood to have filed claims.IFCo is the biggest gas-fired fertiliser plant to be built in the US for years. It is being constructed on a 320-acre site and once complete should be capable of producing 2 million tonnes of fertilisers and industrial chemicals per year.Orascom Construction declared $158.7m of provisions during the year, including a $136m charge against “onerous contracts”. It also drew down $150m in contingency payments from former parent OCI NV which had been set aside if Orascom Construction incurred losses on any projects being built for it.Orascom Construction said that it expects to return to profitability in 2016, “starting with the first quarter which already indicates revenue in the range of $900m and positive consolidated ebitda”, according to Mr Bishai.The company also said that its backlog had grown by 14 per cent over the course of the year, thanks partly to a contract secured in the last quarter of the year in Egypt to convert the West Damietta and Assiut power plants into combined cycle plants.Mr Bishai added that he expects revenue contribution from Algeria to increase as a result of increased awards, but added that its backlog in Saudi Arabia (now just 10 per cent of its total) is expected to decline as no new awards have come through since the first half of 2015.mfahy@thenational.aeFollow The National’s Business section on Twitter

Source : thenational.ae
Read more…Dubai-listed Orascom Construction in 4m Q1 loss

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