CAIRO, EGYPT--(Marketwire - Jun 11, 2012) -
Results as at 31 March
2012 Cairo,
Egypt / 11 June, 2012 8:30 AM
Sorfert Algeria Starts Production & OCI Reports Growth in Construction
Backlog for the 4th Consecutive Quarter
Summary of Consolidated Results for Q1 2012:
* Consolidated revenues increased 1.4% to USD 1,279.4 million (EGP
7,721.2 million) versus USD 1,261.6 million (EGP 7,383.3 million) in Q1
2011
* EBITDA decreased 23.6% to USD 255.8 million (EGP 1,543.3 million)
versus USD 334.8 million (EGP 1,958.9 million) in Q1 2011 and was
adversely affected by the following items:
- Lower than targeted fertilizer sale volumes during the quarter
despite full operating rates resulting in a favorable inventory
position
- USD 19.3 million related to increased selling, general &
administrative expenses build-up for Sorfert Algeria and OCI
Beaumont without the associated revenues
- USD 17.8 million drop related to a 32% drop in melamine prices
- USD 12.7 million drop related to lower net-back ammonia prices
at Egypt Basic Industries Corporation (EBIC)
- Provisioning on profit margins on certain construction
contracts related to the non-issuance of variation orders
* Consolidated EBITDA margin of 20.0% and Construction Group EBITDA
margin of 11.0% duringQ1 2012
* Net income decreased 54.4% to USD 94.0 million (EGP 567.1
million) versus USD 206.3 million (EGP 1,206.3 million) in Q1 2011 and
was adversely affected by the following items during the quarter:
- The lower operating margins during the quarter
- Elimination of the Gavilon Group, LLC's (Gavilon) investment
income during the quarter since Gavilon has been reclassified as
an investment held for sale. Investment income during the
quarter was USD 3.8 million compared to USD 30.8 million during
the same period last year
* Consolidated backlog as at 31 March 2012 grew to USD 6.49 billion
reflecting an increase of 1.4% over the backlog as at 31 December 2011
and 15.5% over the same period last year
* New awards totaled USD 841 million during the quarter
* Infrastructure and industrial work constitute 61% of the
Construction Group backlog as at 31 March 2012
Statement from the Chairman and Chief Executive Officer - Nassef
Sawiris
Our first quarter results have been impacted by lower selling prices
for ammonia and melamine and provisioning on profit margins on certain
construction contracts related to the non-issuance of variation orders.
In addition, during the quarter the Fertilizer Group had lower
dispatches of urea, ammonia and urea ammonium nitrate despite full
operating rates. As a result, we closed the quarter with a favorable
inventory position and this should bode well for the Group since
fertilizer prices have recovered in the second quarter. Moving forward,
we expect to weather the impacts on the first quarter results with the
resurgence in fertilizer prices during late March and increases in
production rates from our new fertilizer plants. We expect a noticeable
improvement in our financial results for the remainder of the year.
Since the first quarter ammonia prices have surged over 50% and urea
prices have rebounded over 20% and we expect prices for both
commodities to remain firm for the second half of the year. During the
quarter, we witnessed a 32% decline in net-back prices for melamine
however prices have started to bottom in the second quarter and we
expect them to rebound in the second half of the year.
Since the start of the year, the Fertilizer Group has made significant
progress on the commissioning of its capacity expansions especially in
the United States and Algeria and continues on-track with its
debottlenecking initiatives in Egypt and the Netherlands.
In the United States, OCI Beaumont sold 38 thousand tons of ammonia
during the quarter and going forward, the plant is on-track to produce
at a rate of 250 thousand tons of ammonia per year benefiting from
favorable natural gas prices in the US. The plant's 750 thousand ton
per year methanol line is slated to start production in June.
In Algeria, Sorfert Algeria has successfully started production runs
for Line I urea and ammonia in May with its first commercial shipment
scheduled in June. Line II starts production later this year. Sorfert
adds 1.2 million tons of urea and 0.8 million tons of ammonia annually
at full capacity.
On 29 May, the sale of Gavilon to Japanese trading house Marubeni
Corporation (Marubeni) was announced valuing the equity of the business
at USD 3.6 billion. OCI expects to receive cash proceeds in excess of
USD 600 million for its 16.8% stake subject to the completion of the
transaction. We had invested USD 340 million for our stake in the
business in mid-2008 and we expect to use part of the proceeds to
finance the Fertilizer Group expansion in North America and potentially
invest in other opportunities under review. Part of the proceeds will
be paid as dividends to shareholders.
The Construction Group reported a 1.4% growth in backlog over the
previous quarter and 15.5% over the same time last year, showing
positive growth for the fourth consecutive quarter. New work secured
during the fourth quarter totaled a healthy USD 841 million, including
a USD 363 million contract to build a 1,000 MW gas turbine power plant
in Baiji, Iraq. The Group will continue its focus on Iraq's
infrastructure development program including power generation, water,
wastewater, hospital and large-scale oil and gas industries.
On 17 May, the Company received unanimous approval from shareholders
during an Extraordinary General Meeting (EGM) in a record voting
turnout on the planned demerger of the company's construction business
from its fertilizer business. At present the General Authority for
Investment (GAFI) is reviewing the demerger proposal. Our team is
working closely with GAFI to expedite the process and we expect the
demerger to be complete during the third quarter.
For additional information
contact:
For additional information on OCI:
OCI Investor Relations
Department: www.orascomci.com
Omar Darwazah OCI stock symbols: OCIC.CA / OCIC EY /
OCICqL / ORSD / ORSCY
Email:
omar.darwazah@orascomci.com
Orascom Construction Industries (OCI)
Erika Wakid Nile City Towers - South Tower
Email: 2005A Corniche El Nil
erika.wakid@orascomci.com
Cairo, Egypt
Hassan Badrawi
Director
Tel: +202 2461 1036/0727/
0917
Fax: +202 2461 9409
This information is provided by RNS The company news
service from the London Stock Exchange
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