Egypt unrest pushes Orascom Development into loss
Swiss-listed Egyptian property and hotels group Orascom Development on Friday reported a full-year net loss of 69.7-million Swiss francs, due to the political turmoil in Egypt and elsewhere in the Arab world last year.
The firm, known mostly for building luxury resorts, took extraordinary charges in 2011 of 82.8 million francs, which included provisions, revaluation of investment properties, and legal fees connected to the political events in Egypt.
Orascom Development made a profit of 94.9 million francs in 2010, after minority interests.
Following the civil uprising that unseated Egypt’s president in February 2011, a slump in investment and legal challenges to state land sales have thrown the real estate sector into turmoil. An exodus of tourists has also made life tough for resort developers.
Slowdown in demand
Orascom Development said revenues in its hotels segment fell 29% due in part to one month of virtually zero occupancy in Egypt’s El Gouna and Taba Heights during the first quarter of 2011 and also because guests traded down from five-star to four-star hotels.
It also said its real estate and construction segment revenues fell 71% due to a 50-day halt in construction activities in Egypt and a slowdown in demand for homes.
“Uncertainties regarding the political progress in the MENA (Middle East North Africa) region, the global economic development and international credit markets continues. Nevertheless, Orascom Development expects a more dynamic development in the second half of the year,” the firm said in a statement.
The firm said credit agreements of 125-million francs finalised in January would enable it to finance all its planned activities for 2012, but did not detail the plans.—Reuters