Orascom Development Holding AG: has released its consolidated financial results for Q1 2024

Ad hoc announcement pursuant to Art. 53 LR.

Orascom Development Holding (“ODH”) (SIX ODHN.SW) has released its consolidated financial results for Q1 2024.

During Q1 2024, ODH achieved a strong performance, with real estate sales of CHF 256.7 million, up by 143.1%. Total revenues increased by 15.7% to CHF 151.5 million despite the challenging business environment.

Key Highlights of Q1 2024

• Total revenues went up by 15.7% to CHF 151.5 million.
• Adj. EBITDA increased by 19.9% to CHF 44.0 million, with a 29.0% margin.
• Adjusted net profit of CHF 26.7 million, up 3.1% vs. Q1 2023.
• Net real estate sales grew by 143.1% to CHF 256.7 million, the highest Q1 sales figure in ODH’s history.
• Cash flow from operations back to green to CHF 42.4 million, signaling our operational excellence.

Altdorf, 21 May 2024 - Despite the challenges posed by the ongoing war in Gaza, geopolitical tensions in the Middle East, and the economic backdrop in Egypt, ODH has demonstrated a solid operational and financial performance in Q1 2024. This is a testament to the strength of our diversified business model, which has enabled the core underlying business to weather the storm and deliver a robust performance. Our prudent cost management has also supported our strong operational performance, which has helped mitigate the impact of the challenging economic conditions in Egypt. We have also maintained a robust balance sheet, with healthy liquidity and strong cash flows, which places us in an excellent position to pursue future growth opportunities.

Financial Review 

Q1 2024:

Despite the unprecedented economic environment and increased global volatility, ODH achieved a solid performance in Q1 2024. Total revenues during Q1 2024 were up by 15.7% to CHF 151.5 million. Gross profit increased by 9.0% in Q1 2024 to CHF 46.2 million; however, gross profit margin saw a slight squeeze to 30.5% (Q1 2023: 32.4%), given the growing pressure of material costs caused by the inflationary environment we are facing.  The boost in revenues and gross profit resulted from the acceleration of our construction activities, with real estate revenues reaching CHF 87.4 million, an increase of 13.8% vs. Q1 2023, and the enhanced business performance of our recurring income segments, up 18.5% to CHF 64.1 million in Q1 2024.

ODH's Adj. EBITDA increased by 19.9% to CHF 44.0 million in Q1 2024, with a margin of 29.0%, signaling our operational excellence. General and administrative expenses decreased by 7.1% to CHF 9.1 million in Q1 2024. Other gains and losses reported a loss of CHF 62.4 million in Q1 2024, mainly due to a one-off FX translation loss related to the devaluation of the EGP against foreign currencies.  ODH's share of associates reported a loss of CHF 1.2 million vs CHF 7.6 million in Q1 2023. The lower performance of the company's share in Andermatt Swiss Alps drove performance, resulting in a loss of CHF 1.7 million in Q1 2024 vs a profit of CHF 7.3 million in Q1 2023, which included one-off transactions. Finance costs increased by 66.0% to CHF 17.6 million due to the increase in interest rates. Adjusted net income excluding one-offs (including forex losses or gains and non-operational one-off transactions) reached CHF 26.7 million in Q1 2024, up 3.1% (Q1 2023: CHF 25.9 million). Including the one-offs, the company reported a net loss of CHF 35.7 million compared to a net profit of CHF 10.5 million in Q1 2023, mainly due to the devaluation of the EGP, which incurred the company FX loss of CHF 56.9 million during the quarter.

Group Real Estate: Our real estate business has achieved stellar financial and operational results, with net real estate sales up 143.1% to CHF 256.7 million

In Q1 2024, net real estate sales were up by 143.1% to CHF 256.7 million compared to Q1 2023. This noteworthy growth trend reflects the industry's steadfastness and resilience in navigating the challenges of prevailing market conditions. The remarkable increase in net sales indicates the industry's adaptability and ability to thrive under adverse circumstances, and it presents a positive outlook for the future of the real estate sector. The Egyptian subsidiary's net real estate sales performance significantly improved during Q1 2024 when measured in EGP. Though this operational enhancement wasn't fully reflected in ODH's value of contracted units when translated into CHF, it is worth noting that ODE's net real estate sales have increased by approximately 218.3% compared to Q1 2023 when measured in local currency to reach EGP 8.8 billion. The increase in sales across all destinations was accomplished by an increase in average selling prices and the number of units sold, which rose by 111.6% to 696 units compared to Q1 2023. 

Real estate revenues experienced an increase of 13.8%, reaching CHF 87.4 million in Q1 2024—additionally, the adj. EBITDA increased by 8.8% to CHF 32.1 million during the same period. The total deferred revenue from real estate, which is yet to be recognized, increased by 10.4% to CHF 681.4 million, providing strong visibility on our real estate revenue across all our destinations over the next 3-4 years.

Group Hotels: Despite the ongoing tension in the Middle East, our hospitality segment exhibited a strong start with a 10.6% increase in revenues, amounting to CHF 44.9 million

Despite the challenging global macro and geopolitical environment, particularly in the Middle East, and the seasonality effect caused by the holy month of Ramadan, our hotel segment has delivered a strong performance in Q1 2024. Our hotels have generated revenues of CHF 44.9 million, a 10.6% increase compared to Q1 2023. This revenue growth has pushed our GOP to CHF 10.3 million, a 1% increase from Q1 2023. This growth has been driven by our hotels' ability to maintain good occupancy levels and improve our room rates despite the ongoing challenges in the industry. Despite these challenges, we have maintained a healthy margin and delivered strong financial results, generating Adj. EBITDA of CHF 18.3 million, an increase of 32.6% and a margin of 40.8% vs. 34.0% in Q1 2023. We have also invested in our properties, including enhancing our facilities and upgrading our technological infrastructure, to ensure we continue offering our guests the best possible experience. We will continue to monitor the ongoing challenges in the industry and adapt our strategies accordingly to ensure that we continue to deliver strong financial results and exceptional customer service.

Recurring income commercial assets: Revenues are up 42.2% to CHF 19.2 million, owing to the successful restructuring implementation and Adj. EBITDA is up by 483.3% to CHF 3.5 million

The commercial assets segment plays a crucial role in financing the Group's growth and shielding our operations against cyclical slowdowns caused by unforeseeable events. Despite the impact of the Egyptian currency's devaluation, the commercial assets segment continued to grow significantly. Consequently, the Group secured more recurring revenue streams, resulting in a 42.2% revenue increase to CHF 19.2 million in Q1 2024. With its consistent growth, the commercial assets segment is expected to continue to provide a stable source of cash flow, protecting the Group's operations from any unforeseen economic slowdowns.

Details on Destinations

El Gouna, Red Sea:

New real estate sales grew by 232.7% to CHF 116.1 million in Q1 2024. International sales represented 42% of total real estate sales during Q1 24 vs. 33% during Q1 23. We increased our real estate average selling price by 25.6% to CHF 4,572/sqm vs. Q1 2023. We have also witnessed a 170.7% uptick in units sold, reaching 111 units vs. 41 in Q1 23. In EGP, net sales grew by 257.3% to EGP 4.1 billion, while average selling prices were up by 38.2% to EGP 179,565/sqm. On the construction front, El Gouna intends to deliver 370 units in 2024. During Q1 2024, 86 units were delivered, and the remaining units will be delivered as scheduled.

Looking at El Gouna's hospitality arm, El Gouna Hotels has continued to thrive despite the challenging market environment caused by geopolitical tensions and the seasonality effect caused by the holy month of Ramadan. El Gouna hotel revenues increased by 11.5% to CHF 18.4 million, while in Egyptian currency, total revenues have increased by 34.9%. Compared to last year, our ARRs were up by 10.5% to CHF 84 per night. The occupancy rate for Q1 2024 reached 63% (Q1 2023: 69%). Foreigners represented 94% of our total hotel occupancy during Q1 2024. On the development side, we are progressing with the construction process for adding 29 new rooms in Casa Cook El Gouna Hotel by 2024. On the commercial assets side, we achieved an impressive 45.4% increase in revenue to CHF 15.7 million in Q1 2024. El Gouna's total revenues were up 8.2% to CHF 71.3 million, while in local currency, total revenues were up by 30.8%.

O West, Egypt:

O West recorded CHF 86.4 million in real estate sales during Q1 2024, a growth of 154.9% vs. Q1 2023. The average selling price in Q1 2024 stood at CHF 1,856/sqm, a growth of 9.0% compared to Q1 2023. Additionally, we witnessed a 124% uptick in units sold, reaching 280 in Q1 24. In EGP, O West has achieved an impressive 204.3% increase in net real estate sales, reaching EGP 3.4 billion, with average selling prices up 30.0% to EGP 72,900/sqm. On the development front, the company plans to hand over more than 1,000 units to clients in 2024. The construction of O West Club is progressing steadily, and the club will become partially operational during 2024, providing O West with a steady, recurring income stream. In CHF, the total revenues from O West increased by 42.9% to reach CHF 30.0 million. Meanwhile, in EGP, total revenues increased by 72.4% compared to Q1 2023.

Hawana Salalah and Jebal Sifah, Oman:

Hawana Salalah destination has maintained a positive trend since last year. Net real estate sales increased by 70.4%, reaching CHF 12.1 million, up from CHF 7.1 million in Q1 2023. The number of units sold also increased by 33.3%, with 32 units sold. During Q1 2024, our real estate average selling prices increased by 5.6% to CHF 2,316/sqm. The hotels in Hawana Salalah maintained operational excellence, with occupancy rates reaching an impressive 92% (Q1 23: 85%). In Q1 24, TRevPAR increased by 13.6%, reaching CHF 170, and GOP PAR also increased by 15.9%, reaching CHF 87 vs. Q1 23. Total revenues from Hawana Salalah hotels increased by 28.1% to CHF 18.7 million. Total revenues from Hawana Salalah increased by 16.2% to CHF 22.2 million.

The Jebal Sifah real estate sales experienced an impressive uptick during Q1 2024, with an 86.7% increase from CHF 4.5 million in Q1 2023 to CHF 8.4 million in Q1 2024. Our average selling prices during Q1 2024 reached CHF 2,115/sqm, and the number of contracted units increased by 141.7% compared to Q1 2023, reaching 29 units sold. Total revenue for Jebel Sifah increased by 10.3% to reach CHF 8.6 million in Q1 2024.

Luštica Bay, Montenegro:

Luštica Bay has started the year with a positive momentum operational and financially. During Q1 2024, our net real estate sales displayed a growth trend, an increase of 25.6% to CHF 11.3 million. Meanwhile, we sold 20 units, a 17.6% increase from the same period last year, and our real estate average selling price increased to CHF 7,160/sqm, up 17.8% from Q1 2023. On the construction side, we are making great strides in constructing 270 units in the Centrale, Marina Village, and Golf Zone areas. Real estate revenues increased by 2.9% to CHF 3.6 million in Q1 2024. As for our hospitality side, The Chedi Hotel, a summer-only destination, reported a 20.0% increase in revenues to reach CHF 0.6 million in Q1 2024, driven by the increase in occupancy, which increased by six basis points to 16%. Total revenues from Luštica Bay have increased by 4.4% to CHF 4.7 million.

Makadi Heights, Egypt:

Makadi Heights achieved outstanding sales results in both Swiss Francs and Egyptian Pounds. During Q1 2024, real estate sales in Swiss Francs increased by 118.8%, reaching CHF 32.6 million. This remarkable surge in sales can be attributed to the average selling price increase of 20.1% to CHF 1,502/sqm in Q1 2024, in addition to a striking 107.7% increase in units sold to reach 216 units sold. Makadi Heights has set a target to deliver 500 units in 2024, and most of these units are expected to be completed early due to the destination's accelerated construction efforts. The total revenue from Makadi Heights was up by 116.0%, recording CHF 5.4 million in Q1 2024. However, in EGP, revenues were up by 172.8% compared to Q1 2023.

Presentation:

The associated financial statements and presentation can be found under the IR section of Orascom Developments’ website under the following links:

https://www.orascomdh.com/investor-relations

Telephone conference today at 3:00 CET (Zurich Time):

Orascom Development invites you to its Q1 2024 results conference call on 21 May 2024 at 3:00 PM CET (Zurich Time). Chief Executive Officer Omar El Hamamsy, Chief Financial Officer Ashraf Nessim, and Group Director of Investor Relations Ahmed Abou El Ella will present Q1 2024 results and will be available to answer questions. Registration is not required.

Dial-in details are as follows:

Click here for the webinar link

Event number: 994 8958 8504

Event password:  928564

A call recording will be available after the call

Contact for Investors:      

Ahmed Abou El Ella     

Director of Investor Relations    

Tel: +20 224 61 89 61

mobile: +20 122129 5555      

Email: ir@orascomdh.com

About Orascom Development Holding AG:

Orascom Development Holding (ODH) is a leading developer of fully integrated towns, including hotels, private villas, apartments, leisure facilities such as golf courses, marinas, and supporting infrastructure. Orascom Development Holding’s diversified portfolio is spread over seven jurisdictions (Egypt, UAE, Oman, Switzerland, Morocco, Montenegro, and the United Kingdom). The group currently operates ten destinations: five in Egypt (El Gouna, Taba Heights, Makadi Heights, O West, and Byoum), The Cove in the United Arab Emirates, Jebel Sifah and Hawana Salalah in Oman, Luštica Bay in Montenegro, and West Carclaze Garden Village in the United Kingdom. The shares of ODH are listed on the SIX Swiss Exchange.

For more information, please visit https://www.orascomdh.com/.

Contact for Investors:      

Ahmed Abou El Ella     

Director of Investor Relations    

Tel: +20 224 61 89 61

Mobile: +20 122129 5555      

Email: ir@orascomdh.com

Disclaimer

This press release may contain forward-looking statements based on current assumptions and forecasts of ODH management. Known and unknown risks, uncertainties, and other factors could lead to material differences between any forward-looking statements made here and the actual development, particularly ODH's results, financial situation, and performance. ODH accepts no responsibility for updating or adapting forward-looking statements to future events or developments.