Orascom Construction Industries (OCI) reported a 31 percent drop in net income for the third quarter ending Sept. 30, 2012, compared to the year-ago quarter, mainly citing a slowdown in its Construction segment. OCI said its Fertilizer Group had strong results. Company-wide, net income fell to $126.8 million from the year-ago $182.9 million. Revenues from continuing operations were up 1 percent, to $1.37 billion from $1.36 billion.
OCI nine-month income was off 38.6 percent, to $340.7 million compared to the year-ago $554.7 million. Revenues from continuing operations were off 2.3 percent, to $4 billion from $4.1 billion.
OCI also confirmed that it has beefed up its ammonium sulfate business by acquiring distribution rights for product produced by Lanxess NV at its Antwerp facilities in Belgium. The rights were acquired from Fertiva GmbH, a unit of Eurochem. OCI says the deal entails up to 1 million mt of AS, including granular product. OCI unit OCI Nitrogen currently distributes approximately 750,000 mt of AS produced by DSM NV in the Netherlands. Combined, the Fertilizer Group expects to annually distribute 1.75 million mt of AS both in standard and granular form, making it a leading supplier in Europe and Brazil.
While OCI pegged fertilizer results as strong, it did note some glitches for the fourth quarter. It confirmed that in November, natural gas supply to both of its plants in Egypt saw drastic supply cuts in natural gas supply due to unscheduled stoppages on the gas grid for maintenance work. In order to minimize production down time, the EBIC complex brought forward its scheduled three-week maintenance turnaround from the fourth week of November to the second week. The EFC complex also brought forward its revamp/maintenance turnaround at one of its urea lines from the first quarter of 2013 into fourth quarter 2012. Regardless, OCI said the gas shortfalls will have an impact on the company’s fourth-quarter production utilization rates and results.
In Algeria, OCI expects its new project, Sorfert Algeria, to complete all mechanical work on its second line at the end of December. Once complete, all necessary permits are expected to be obtained in the first quarter, ahead of planned full-fledged commercial production. OCI expects Sorfert Algeria to start contributing to earnings in first half 2013.
OCI reports that its OCI Beaumont ammonia plant, which began ramp-up this year, is now producing at designed capacity – 250,000 mt/y – and the methanol plant at 70-80 percent of its 750,000 mt/y capacity. Third-quarter Beaumont ammonia sales volumes were 57,700 mt and YTD 159,200 mt.
OCI’s newest project, Iowa Fertilizer Co., broke ground for its $1.65 billion nitrogen complex Nov. 19. It plans to complete the project during the summer of 2015.
In other news, OCI said the Egyptian Tax Authority is reviewing tax years 2005-2010, and that the company has provided all necessary documentation. OCI said it is confident new laws will not be applied retroactively, and that under existing law it is clear that all capital gains resulting from the sale of shares listed on the Egyptian Stock Exchange were exempt from taxation.
As for the planned OCI demerger, which would split Fertilizer and Construction into two separate companies, OCI said it continues to work with the Egyptian Financial Supervisory Authority to receive final procedural approvals for the demerger. However, OCI said no progress has been made on the matter since October.