Earnings Watch: EFG Hermes, Orascom Construction report 3Q2021 results
EFG Hermes’ net income dropped 16% y-o-y to EGP 356 mn in 3Q2021, according to its quarterly earning release (pdf). The financial services group’s revenue fell 17% to EGP 1.2 bn during the quarter mainly due to an unfavorable base effect related to a one-time private equity incentive fee booked in 3Q2020 for selling a controlling stake in its UK solar energy portfolio Vortex III.
On a nine-month basis, the group’s net income rose 26% y-o-y to EGP 1.1 bn on the back of strong revenue growth from the Vortex III exit and “strong unrealized and realized gains on investments booked in 9M2020.” EFG Hermes’ revenues were up 8% y-o-y during 9M2021 to EGP 4.0 bn, while group operating expenses were muted, inching down 1% y-o-y to EGP 2.5 bn in 9M21.
In detail: Buy-side revenues declined 74% to EGP 115 mn due to last year’s Vortex III exit and a “very weak” quarter for its capital markets and treasury operations segment, which saw revenues fall 58% to EGP 156 mn due to unrealized losses on seed capital revalution. On the sell-side, strong growth in the group’s investment bank and brokerage offset the base effect to rise 45% to EGP 406 mn. Investment banking revenues almost tripled to EGP 107 mn while its brokerage arm brought in EGP 299 mn, up 23% from 3Q2020.
Non banking financial institutions’ revenue grew 52% to EGP 507 mn, supported by microfinancing firm Tanmeyah and consumer finance platform valU. Tanmeyah reported revenues of EGP 355 mn, up 36% from 3Q2020, while valU continued to outperform, with revenues more than tripling to EGP 97 mn.
Looking ahead: “We are excited about the headway we are making in line with our strategy to transform into a full-fledged universal bank in Egypt,” said (pdf) CEO Karim Awad. “We are confident that as we continue to leverage our robust operational capacities and diverse lines of business, the group is well-positioned to close out 2021 on a strong note.”
Orascom Construction (OC)’s bottom line dipped 6% y-o-y to USD 28.4 mn in 3Q2021, according to its earnings release (pdf). Revenues rose 4% y-o-y to USD 857.7 mn, 68% of which came from operations in the Middle East and Africa, and the US the remainder. Operating cashflow for the first nine months of the year remains negative at USD -114 mn though cashflow turned positive in 3Q, coming at USD 42.8 mn.
The company’s consolidated backlog hit a new record of USD 6 bn as of the end of September, after new awards climbed 42.7% y-o-y to USD 962.4 mn for the quarter. This comes on the back of its newly signed contract for construction of Egypt’s first high-speed rail system as well as “sizable” contracts in the US student housing sector. Pro forma backlog including the company’s 50% share in Besix increased 15% y-o-y to USD 8.9 bn as of the end of the quarter. Pro forma new awards rose 85.8% y-o-y to USD 1.7 bn.
“We achieved several operational milestones this quarter. We witnessed in Egypt the completion and inauguration of Bahr El Baqar Water Treatment Plant, the largest in the world, and are working in full swing at our large projects such as the monorail in Egypt and data centers in the US,” said CEO Osama Bishai.
EDITOR’S NOTE: This story was corrected on 18 January, 2021. A previous version of the story stated an incorrect figure for the value of Orascom Construction’s consolidated backlog.