- Revenue: Up 25% year-over-year for Q2 2024.
- Adjusted EBITDA: Increased by 69% year-over-year for Q2 2024.
- Net Profits: Up 54% year-over-year for Q2 2024.
- First Half Net Profits: Up 37% when adjusted for one-off effects.
- Real Estate Sales: Up almost 60% to CHF433 million for H1 2024.
- Real Estate Revenue: Up 9% to CHF167 million for H1 2024.
- Hotel Segment Revenue: Up 8% half-on-half for H1 2024.
- Hotel Segment Operating Margin: Up 13% half-on-half for H1 2024.
- Commercial Assets Revenue: Up 15% half-on-half for H1 2024.
- Commercial Assets Operating Profit: Up 55% half-on-half for H1 2024.
- Deferred Revenue Balance: Almost CHF0.75 billion.
- El Gouna Hotel Occupancy Rate: 73% in Q2 2024.
- El Gouna Average Room Rate (ARR): CHF90, up 11% year-over-year for H1 2024.
- O West Deliveries: 316 villas delivered in H1 2024, with a target of 1,000 for the year.
- Makadi Heights Sales: More than doubled in local currency for H1 2024.
- Salalah Real Estate Sales: Up 88% year-over-year for H1 2024.
- Salalah Hotel Occupancy Rate: Increased to 65% from 62% year-over-year for H1 2024.
- Gross Profit Margin: Improved compared to last year.
- Adjusted EBITDA Margin: Improved compared to last year.
- SG&A Expenses: Almost fixed compared to last year, despite revenue growth.
- Cash Flow from Operations: CHF88 million compared to a negative CHF13 million last year.
- Monetizations: Almost CHF230 million realized over a 2-year period.
Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenues for the second quarter were up 25% compared to the same period last year.
- Adjusted EBITDA increased by 69% for the same period, indicating strong operational performance.
- Net profits rose by 54% despite the negative impact of currency devaluation in Egypt.
- Real estate sales for the first half of 2024 were up almost 60%, providing a healthy deferred revenue balance.
- Hotel segment revenues increased by 8% and operating margin improved by 13% despite geopolitical challenges.
Negative Points
- The company is still facing negative net profits year-to-date due to the devaluation of the Egyptian pound.
- The hotel EBITDA margin was down in the second quarter compared to the same period last year.
- The number of contracted units sold in O West was down 18%, attributed to local market dynamics and economic uncertainty.
- Non-controlling interests are increasing, which may affect the equity of ODH shareholders.
- The company has not yet achieved profitability in some of its newer markets, such as Oman and Montenegro, which are still in the ramp-up phase.
Q & A Highlights
Q: The number of contracted units sold in O West was down 18%. Is this specific to timing? Also, the hotel EBITDA margin was down in the second quarter compared to last year. Can you explain this? And what are your expectations for the second half of the year?
A: The decline in O West unit sales is due to local market dynamics and a temporary pause following the devaluation. We expect to end the year with higher unit sales than last year. The hotel EBITDA margin was impacted by the shutdown of Taba due to the Gaza conflict. Despite this, we are optimistic about the company's outlook for the second half of the year, expecting healthy growth across hotels, real estate, and commercial segments.
Q: The company has been performing well operationally, but there is a disconnect with stock performance. What measures are being discussed to support the stock performance?
A: We are actively discussing with the Board to start dividend flows from Orascom Development Egypt (ODE) to Orascom Development Holding (ODH). Additionally, we are planning more investor roadshows and meetings to increase stock liquidity and attract new shareholders.
Q: Can you elaborate on the loss on ASA and its expected development?
A: The loss on ASA is due to the timing of real estate unit deliveries. We expect ASA to be profitable by the end of the year as more units are delivered.
Q: How long would it take for Taba to get back up and running after the Gaza conflict?
A: Operationally, Taba can be up and running within 3 to 4 weeks. Commercially, it may take 1 to 1.5 years to regain tourist confidence and reach viable occupancy levels.
Q: How much room do you have to increase ARR in USD in Egypt, given the high foreign occupancy rate?
A: We believe there is significant room to increase ARR. Our new head of hotels is focusing on commercial yield and revenue management, and we expect to see further ARR increases as these strategies are fully implemented.
Q: Where do you see incremental land monetization taking place within the portfolio over the next 6 to 12 months?
A: We have several transactions in the pipeline across El Gouna, Montenegro, Oman, and O West. The timing of these transactions depends on market conditions and buyer confidence.
Q: How long would it take to build the 270 units in Montenegro, and what are the expected sales potential versus the cost to build?
A: The 270 units in Montenegro are on track for completion within the planned timeline. We expect healthy sales potential, but specific cost and sales figures were not detailed in the call.
Q: When the EBITDA of ODE is subtracted from the total EBITDA, the group without ODE is still negative. When do you expect the rest of the group to become contributors?
A: We are close to turning positive in Montenegro and expect Oman to follow within a year or two. We are working hard to ramp up these destinations and get them past the negative part of the J curve.
Q: The noncontrolling interest on the balance sheet is increasing. How do you see the development of equity for ODH shareholders in relation to noncontrolling interest?
A: The increase in noncontrolling interest is due to the profitability in Egypt, where ODH owns 70% of ODE. As profitability grows in Egypt, the share of minority interest increases proportionally.
Q: Is the consolidation of ASA on the agenda, especially if it achieves profits this year?
A: Consolidation of ASA is discussed annually with the Board. There is no active plan currently, but we may consider it in 1 to 2 years once ASA consistently delivers positive profits and reduces its debt.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
