Earnings Call: H1 2026

Aug 17, 2026

Summary

H1 revenue rose 52.3% and EBITDA reached $200.9M, while net profit nearly doubled to $115.3M. Backlog climbed to $10.9B, led by U.S. data centers and MEA awards, amid geopolitical and working-capital risks.

Afternoon and good morning, everyone. Welcome to Orascom Construction's H1 2026 results call. This is Hesham El Halaby, Investor Relations VP. We are also joined by Osama Bishai, our CEO, and Nahem Bentayeb, our CFO. As usual, we will start with an overview from Osama and Nahem, followed by a Q&A session. Osama, I turn the line over to you. Thank you, Hesham. Good morning and good afternoon, everybody. We are apologizing. We had to bring you in the midst of August to have this call. Quickly, to give you some highlights of our H1 results or Q2 results. Number one, we are still managing and mitigating the impact of the geopolitical events in the region. It is still an ongoing event. We are still addressing some of the concerns on supply chain, shipping lines, particularly to the east side of Saudi and to the Emirates. It has a global impact on some of the building material prices. So far, we believe it is an ongoing healthy discussions with our clients. We are mitigating that impact on a lot of our projects that we are dealing with. This is one of the issues that we are addressing almost on weekly basis, and strategizing how to mitigate that on the long term. Obviously, we are hopeful that this issue disappears this year. On the other hand, we are extremely excited to announce the size of our backlog. We are $10.9 billion consolidated backlog at end of June 30. The buildup of that backlog is due to both regions, the MEA region and the U.S. On the U.S., we are benefiting from the growth and the exponential move on data centers in the U.S. We are well-positioned there. We are receiving our fair share of data center awards. We are seeing that like an ongoing exercise that is, I would say, growing over the next 6-12 months. On the other hand, strategically, in the MEA region, we are still also benefiting from not only what we have executed in the past, but also our position on strategic projects like the connection between Tunisia and Italy. This is obviously based on our successful execution for the connection between Egypt and Saudi. Our wind development program, we have been awarded EPC for the 900 megawatts in Egypt. We are also getting additional water projects and power work in the Middle East. This decent backlog that we have also gives us more confidence of not only what we have been saying about the quality of backlog and the quality of the returns, but also would allow us even to be more selective over the next period, especially that we have yet to see the impact of the geopolitical events in the Middle East. We believe that will trigger some infrastructure projects that will become strategic and critical, particularly in Saudi and the Emirates. We believe we are well positioned, at least, again, to take some of our fair share there. As far as our bottom line and results, we hit an EBITDA of $200 million for the first half, which is a great milestone. We have achieved more than $100 million of net profit for the whole group. We are seeing also that the U.S. is improving its KPIs, so we believe that we will continue to expect an improvement in the EBITDA or net profit on our U.S. business. I think one of the challenges we have, which is a timing issue, is that we have a higher negative cash flow on our Egyptian operation. Actually, it is in the back of some particular real estate work in Egypt, where we are progressing much faster than concluding our contractual arrangements and receiving the payments. We believe this will be mitigated over the next two quarters. The other issue is, obviously, our 900 megawatts. We continue to expand our wind farm business. We have started with a limited notice to proceed on the 900 megawatts. We concluded our EPC. We believe that we will achieve FC during this year. We will achieve generating power within 24 months. I would leave the mic to Reham to walk you through the numbers. Then we will open the floor for the Q&A. Thank you so much. Thanks, Othman. Good afternoon. Good morning, everyone, and thank you for joining us today. Growth across all operating segments has driven yet another strong quarter for our group. Just briefly recapping on backlog figures that Othman has previously highlighted, our consolidated backlog increased 13.9% year-on-year to $10.9 billion, led by strong new awards in quarter 2 of roughly $2.95 billion, with the U.S. accounting for 69% share and the delta is Middle East-based. Our quarter 2 2026 revenue increased 36.2% to $1.5 billion, and H1 2026 revenue increased by 52.3%. In quarter 2 of 2026, group revenue growth was strong across regions, with MEA rising 19% year-on-year, supported by rapid backlog conversion, while U.S.A. revenue increased 59.5%, boosted by contributions from newly awarded data center projects. Quarter 2 2026 group EBITDA increased 46.5% to $92.6 million, compared to quarter 2 2025 adjusted EBITDA of $63.2 million. Quarter 2 2026 EBITDA margin accordingly increased to 6.1%, up from 5.7% in Q2 of last year on the back of higher margins in the U.S.A. Adjusted Q2 2025 EBITDA of $63.2 million just mentioned, basically excludes a $22 million of one-off gain that was related to favorable settlement to a claim in Saudi, as well as the tribunal awards for Sidra Medical project in Qatar. Our H1 2026 EBITDA reached $200.9 million compared to adjusted EBITDA for first half of 2025 of $117.4 million, with a margin of 6.7% compared to 6% of last year, reflecting higher margins in both regions, MEA and U.S.A. In quarter 2 of 2026, BESIX contributed $1.7 million to the group's net profit, compared to $9.9 million in quarter 2 of last year. For the first half of 2026, BESIX total contribution amounted to $6.6 million compared to $13.2 million for the same period last year. Also important to highlight that in Q2 of this year, we have received a €10 million dividend from BESIX for our 50% share. Our investments and subsidiaries in building materials, equipment services, and facility management constituted 6.9% of our group's net income, providing diversification benefits. During H1 of 2026, we also received distributions of $6.1 million from our operational concessions. We expect this figure to increase in accordance with our previous guidance as our concessions are currently under development begin operations. Q2 of 2026 net profit increased by 73.9% year-on-year to $61.9 million. Net profit margin also increased to 4.1%, up from 3.2% last year. Our H1 2026 net profit nearly doubled year-on-year to $115.3 million at a margin of 3.9%, compared to a margin of 3.1% for the first half of 2025, demonstrating our robust operational efficiency. Now, moving on to balance sheet and cash flow. Equity accounted investees amounted to a total of $521 million, of which BESIX is our largest investment for $451.2 million. Our group total equity crossed the billion-dollar mark as of closing June 2026, up from $900.7 million in December of 2025, primarily driven by our net profitability for the period. Trade and other receivables slightly increased to $2.2 billion compared to December 2025 level of $1.9 billion, attributed to strong project execution and billing in MEA projects. Trade and other payables, on the other hand, balance reached $2.2 billion, maintaining the same level as December 2025 closing. Our gross debt stood at $499 million as of June 2026, compared to $314.9 million for December of 2025. Working capital deployment to accelerate backlog execution in Egypt resulted in temporary negative operating cash flow of $54.5 million in H1 of this year and higher debt levels. Nevertheless, the group maintained a healthy net cash position, ending with a net cash position of $731 million of net cash and $870 million if we adjusted to, by the $139.4 million investment in financial assets that we had closing of H1 of this year. Thank you for listening in, and we are now ready to open our Q&A session. We will now begin the question and answer session. For audio-based questions, if you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. For text-based questioning, if you have logged in via the webcast, please use the Q&A button to submit your questions. Please stand by while we compile the Q&A roster. We have a text-based question. Hisham, I will turn the call to you. The U.S. business has scaled rapidly, and you referenced the growth of the data center project. Are you increasingly seeing opportunities to expand both with existing data center clients into larger scopes of work? Well, today, on the data center space, what we are seeing is probably a few features that are working in our favor. Number one, the size of each contract is growing dramatically. So instead of that campus has data centers with a value of $500 million or even $700 million, today, we're looking at campuses of values of $2 billion and more. That's part of the growth. The other feature that we have successfully added is the fact that today we are working with most of the hyperscalers, and a couple of the developers, which basically gives us, number one, a diversity and allows us to grow as far as the backlog or the revenues. We continue to monitor that carefully because there is very little visibility of how long this will be sustained. Are we talking a horizon of? We can see a horizon of at least three years ahead of us. Are we talking about three years, or are we talking about another five to eight years? That's really a question that we have yet to see. We didn't know how it would grow when we started working on data centers in 2016 and 2018. But today, it is a big chunk of our U.S. business, and we feel that we are well positioned to continue to grow there as long as the AI or the tech industry is continuing to invest in that. We believe also that the next play will be power, and we are trying to position ourselves in a good way in that space. Our next question: Do we expect impact of conflict and disruptions on EBITDA margin in the coming quarters? I don't believe that there will be an impact on the EBITDA margin, but obviously, the conflict has a lot of unknowns in it. So far, we believe that we can maintain our current levels. We have, most in our contracts, some risks and contingencies. We are also discussing with our clients some of the cost impact compensation. Our initial thought that we will be able to maintain our current levels. But this is a situation where nobody can guarantee what will happen over the next six months. Our next question: Could you clarify the reason behind the major year-on-year drop in concession income? Actually, we believe it's a one-time off due to the fact that there has been a drop in the wind speeds on the Gulf of Suez. That affected negatively the power output, reflecting this change. Our next question. Share of associates income during Q1 and Q2 2026 is below historical run rates. How should we look at this line item for the next several quarters and into 2027? Can we expect a recovery? What's the share of associates? This is for, again, this share of associates is also our equity investments, including our wind projects that Othman referred to. Typically, the revenue is dependent on the wind speed, and ultimately the production. As a result, with lower wind readings, the contributions are lower. Typically, the second half of the year, the wind speed is typically higher than the first half of the year for the locations our wind farms are geographic. Our next question. Looking at the current project pipeline, where do you see the biggest opportunities over the next 12 to 18 months? That's a good question. We believe, on the U.S. side, data centers will continue to be an opportunity of growth and value creation in the U.S. As I just alluded a few minutes ago, we believe also the power associated with data centers could be another space that could have a pipeline of opportunities. Going back to the Middle East, obviously, on the Egypt side, Ras El Hekma is a potential pipeline. We can see the pipeline coming, and obviously, the client is investing a lot in Ras El Hekma, and that will be part of our growth in Egypt. On the other hand, we believe that particularly in UAE and Saudi, there will be two things. We believe power and water is our pipeline there. Plus the fact that there will be some fast-track emergency projects that will pop up due to the geopolitical events, that will be adopted by both governments. We feel that a lot of them will be associated with infrastructure projects, and we believe that we have a good position to get a reasonable share in this particular event. Our next question- As a reminder- Please go ahead, Jane. As a reminder, if you would like to ask an audio-based question, please press star one to raise your hand. Turning back to you, Hesham El Halaby. Thank you. Do you expect the strong momentum in U.S. EBITDA margins to continue due to the data center projects, or do you expect margins to normalize back towards a historical 3%-4% range? We expect to improve on that due to the fact that we have this electrical installation arm that enhances our productivity on the data centers, and also enhances our bottom line, due to the fact that we are adding an additional activity with a higher margin in the mix. We believe that there is a tendency to improve on the current margins. That will continue depending on how much we self-perform on the electrical side in the data centers, which is obviously also curtailed by resources and availability of electricians and staff and all that, which is getting to be a tight market due to this explosion in data centers in the U.S. Our next question. What would be the standalone profit before tax margins on data center contracts? I think this is very difficult to highlight because we have a mix. The project has a mix of projects where we are working in certain jurisdictions, where we are in joint venture with joint ventures, where we are using third-party subcontractors, where we are also having a certain level of negotiated umbrella agreements with the hyperscalers. It is very difficult, but as you can see that the data centers are representing somewhere between 50% or more of our business in the U.S. So I think what we are achieving today in the numbers is pretty much a floor, and we should improve on that. Our next question. Please provide more color on tailwinds expected from accelerated infrastructure spending in the Middle East. Do we expect further acceleration on new orders on an annual basis in 2026 and 2027? I think that conventional wisdom says yes, but we haven't seen that. I think it's a little bit premature. I don't see that the projects are proposed to the market yet. We are just hearing about projects and some things that may pop up in the pipeline. Also, we are in the midst of August, so a lot of the decision-makers are not available. So I think that probably in Q4, we will have better clarity on the pipeline. Yes, I believe there will be more acceleration of certain projects or execution of certain projects in the region. Our next question. How should investors think about the long-term earnings and cash flow contribution from concessions as this becomes larger? As this becomes, sorry? Come again. Larger. So, As the size of the concessions business grows. Yes. So, from our concessions business, by 2027, we expect their contribution, in terms of dividends to the group, to be in the range of $15 million-$17 million. With our current group. With our current portfolio. We still have under construction currently, the 900 megawatts that Osama referred to that is under development. And we are also finalizing Project Wave in U.A.E. Our next question. All great news. Thank you. With NNS Holding consolidated a 57% stake in OCI and the AFM review underway, what is management's current expected timeline for the OCI EGM vote and the final closing of the Orascom combination? We believe that based on the timeline communicated to us by OCI, that they will call for their AGM beginning of September. There is also this voluntary offer by NNS. We believe that they could be complete with all their internal process, maybe the first half of November this year, which means that we can conclude the whole process by year-end. Our next question. Can you explain the liability item on the balance sheet called billing in excess of construction contracts? Yes. This is over billing, meaning that these are amounts that we have billed and collected from our clients ahead of actually reaching the same progress on site. That is why it is a liability, because it is a collection that we have made from our clients. However, the work is not still executed. It is still not executed, being executed, which is actually exactly the opposite of under billing on the asset side. Our next question. Why has BESIX profitability dropped in 2026? BESIX took a provision due to the geopolitical conflict. Because they have a concentrated work in the Emirates that was affected by the geopolitical situation. They also were affected by maybe a lot of more evacuation of some of their management staff from the region back to Belgium. That is one thing. The other thing is that some of their marine activities were being stuck due to the fact that their equipment is in Dubai Port, and they could not move those equipment in due time to start some activities in Africa. Basically, that also generated some additional costs that we believe that it will be negotiated and discussed with the clients. But conservatively, they took provision for all these issues. We have not received more questions on the webcast. Gillian, have you received any by phone? There are no further audio questions as well, Sean, so I will turn it back to you. Thank you. Osama, I will turn the line over to you for closing remarks. Okay. Well, again, thank you very much for joining the call. We understand that it is in the midst of summer. We hope we will continue our progress as we are having now. We will be seeing you all, hopefully by mid-November for the Q3 results. Thank you so much. This concludes today's call. Thank you for attending. You may now disconnect. Thank you.