Orascom Development Egypt (ODE) started the year on solid grounds with strong operational and financial results despite the headwinds from the Russian-Ukrainian conflict and the economic backdrop in Egypt, especially after the Central Bank of Egypt's (CBE) decision to devalue the EGP against foreign currencies. The strong growth during the first quarter (1Q) of the year was driven by a significant increase in the real estate segment's performance and enhanced business performance of the hotels and town management segments. Revenues reached EGP 1.9bn, up by 32.2% y-o-y compared to EGP 1.46bn in 1Q 2021. Gross profit also increased by 18.5% to EGP 681.1m, up from 1Q 2021's EGP 574.9m with a gross margin of 35.3%. The boost in revenues and gross profit also resulted from the acceleration of the company's construction activities, with real estate revenues reaching EGP 1.4bn, an increase of 18.1% compared to 1Q 2021. Furthermore, earnings before interest, taxes, depreciation, and amortisation (EBITDA) rose by 22% to EGP 721.1m with a 37.3% margin, compared to EGP 590.9m and a margin of 40.5% in 1Q 2021. On the other hand, the company's other gains and losses recorded a loss of EGP 108.2m vs a gain of EGP 82.4m in 1Q 2021. Gains and losses are the opposing financial results that will be produced through a company's non-primary operations, the company's FX translation loss is mainly related to the devaluation of the EGP in March 2022. Additionally, interest expenses increased by 7.3% to EGP 75.2m in 1Q 2022, up from EGP 70.1m, due to the increase in interest rates in March 2022. This operational excellence was reflected in ODE's bottom-line figures with net income increasing by 5.7% to EGP 463.7m, up from EGP 438.5m. It is worth mentioning that adjusted net income excluding one-offs — which includes forex losses or gains along with any non-operational one-off transactions — increased by almost 60.6% from EGP 356.0m to EGP 571.9m. The group also continued to preserve a healthy balance sheet and monitor its cash balance and liquidity. During 1Q, ODE was able to increase its cash balance by 4.1% to EGP 3.2bn. Meanwhile, total debt stood at EGP 3.8bn, up from EGP 3.4bn. The increase in debt amounts is mainly a result of the depreciation of the EGP against foreign currencies. However, ODE continued to generate positive cash flows from operations, recording EGP 224.2m, up from 1Q 2021's EGP 396.3m. The company also recorded net real estate sales of EGP 2bn, coupled with accelerated construction, boosting its revenues to EGP 1.4bn. Additionally, O West continues to affirm its leading position in West Cairo and recorded EGP 1bn in sales — a growth of 31.1%. This brings cumulative sales in O West to EGP 12.6bn from its launch date.
