Release Date: August 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Orascom Construction PLC (CAI:ORAS, Financial) achieved a revenue of $1.477 billion in H1 2024, showing steady progress.
- The company improved its EBITDA and bottom line, with adjusted EBITDA increasing 65.2% year-on-year in Q2 2024.
- The first phase of the 500-megawatt wind farm is ahead of schedule and expected to be operational in Q4 2024.
- The U.S. operations showed strong performance with a 27.8% year-on-year increase in revenue, driven by data center and aviation projects.
- BESIX contributed positively to profitability, with a 20% higher contribution in Q2 2024 compared to Q2 2023.
Negative Points
- Group revenue decreased by 6.3% year-on-year to $711 million in Q2 2024, impacted by the devaluation of the Egyptian pound.
- MEA revenue decreased by 29% year-on-year due to the EGP devaluation and completion of existing projects.
- The group's total equity decreased to $674 million as of June 2024, primarily due to currency translation differences and dividend payouts.
- Cash outflow from operations was $54.2 million in Q2 2024, mainly related to high progress on certain projects.
- The EBITDA margin for U.S. operations dropped by 2.9% in Q2 and H1 2024.
Q & A Highlights
Q: How much will the new 500-megawatt wind farm add to EBITDA once online?
A: The 500 megawatt wind farm, where we have a 25% ownership, will not affect our EBITDA but will impact our net income margin. The exact numbers depend on various factors, including wind strength and seasons.
Q: Are there any new awards or sign-ups from Ras El Hekma?
A: It is too early to discuss new awards from Ras El Hekma. Real activities are expected to start in the first half of next year or beyond.
Q: Are there plans to sell BESIX soon?
A: While anything is for sale at the right price, we believe BESIX has significant upside potential at this moment, so it is too early to discuss selling it.
Q: Is there any guidance on the second half of 2024 earnings and EBITDA margin?
A: We expect to continue our current trajectory, possibly doing even better. The U.S. market shows clear growth, and timing issues in MENA, particularly Egypt, will affect the results.
Q: Is there any consideration to sell the U.S. business given its strong results?
A: While anything is for sale at the right price, the U.S. business has been progressing well, focusing on risk management and the right market segments. We aim to maintain this sustainable model.
Q: Can you provide more color on the improvements in EBITDA margins in the Middle East and Africa segments?
A: We have continued to improve EBITDA margins, but price adjustments due to inflation affect quarterly results. Once stabilized, we aim to reach double-digit levels.
Q: What is the top-line guidance for 2025?
A: We focus more on improving the bottom line. However, we have many new contracts that started recently, and we aim to continue strong execution and billing to reduce our backlog.
Q: Do you see improvements in the execution rate in Egypt?
A: Yes, we expect improvements in the second half of 2024 and peak execution in the first half of 2025.
Q: What is the CapEx guidance for 2024 and 2025?
A: We have a CapEx of around $30 million for the first half of 2024 and expect a similar amount for the rest of the year to support new projects.
Q: Which areas of your business are you most optimistic about, and where do you see the most uncertainty?
A: We are optimistic about new contracts, particularly with creditworthy clients and projects funded by international institutions. The main uncertainty is the Egyptian pound's forecast against the dollar and inflation impact.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
