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Egyptian unrest hits Orascom Development with loss, sales starting to recover Swiss-listed firm specialising in building luxury resorts sees 9-month profits tumble 53 per cent but says sales are starting to recover
Swiss-listed Egyptian property and hotels group Orascom Development reported a third-quarter net loss of 2.98 million Swiss francs on Wednesday, hit by political and economic upheaval in Egypt and other parts of the Arab world. The group, which said it made a net profit of 29 million francs in the same quarter of 2010, also posted an 18.9 million-franc net loss for the first nine months of the year, having made a net profit of 76 million francs in the same period last year. Since then the civil uprising that unseated Egypt's president, a slump in investment and legal challenges to state land sales have thrown the real estate sector into turmoil. Revenues at the Swiss-listed company, known mostly for building luxury resorts, fell by 57 per cent to 163 million francs in the first nine months of the year. "The negative impact of the political and economic upheavals in Egypt and the Arab world continued to negatively affect the results of Orascom Development," the company said. Hotel revenue slid 40 per cent to 84 million francs as occupancy rates in Egypt slumped by 90 per cent in the nine-months. Real estate and construction revenue tumbled 76 per cent to 41 million francs, with slower construction in two of its main markets, Egypt and Oman. Business in Egypt came to a standstill due to the uprising that toppled President Hosni Mubarak and construction has been slow to pick up but the group, which has been diversifying abroad, said its real estate pre-sales rose by 30 per cent on a year ago. Orascom Development expects to achieve total revenue of 260 to 280 million francs in 2011, it added. An Egyptian court sentenced the executive chairman of Orascom, Samih Sawiris, to two years in jail in August on charges of manipulating the firm's stock price. The group later said it had reached a settlement that effectively annuls the jail sentence. Orascom denied the charges and questioned the legal process which led to the ruling, saying it was not given a chance to defend itself or clarify its position, as required by law. The developer said on Wednesday that its administrative expenses surged due to "provisions for investments in the Middle East and legal charges" that totalled 17 million francs in the nine-month period. The group did not say what those legal costs were. Orascom added that revaluation of bank balances in foreign currencies led to the loss of another 14 million francs.
