Orascom Development Egypt has released its consolidated financial results for 1H 2023

Steller top-line and bottom-line figures with revenue reaching EGP 6.2 billion، up 62.2% y-o-y، net profit increasing by 17.2% to EGP 1.0 billion and net real estate sales of EGP 7.5 billion up c. 60%.

Key Highlights of 1H 2023 vs. 1H 2022

 Total revenues increased by 62.2% to EGP 6.2 billion

 Adj. EBITDA up 65.1% to EGP 2.3 billion with a margin of 37.0%

 Our net profit increased by 17.2% to EGP 1.0 billion despite being affected by EGP 334.6 million in FX losses due to the devaluation of the Egyptian currency

 Our hospitality revenues increased by 118.2% to EGP 1.4 billion، surpassing pre-covid levels

 Net real estate sales for 1H 2023 are up 59.9% to EGP 7.5 billion

Key Highlights of Q2 2023 vs. Q2 2022

 Total revenues increased by 71.7% to EGP 3.2 billion

 Adj. EBITDA up 68.7% to EGP 1.1 billion with a margin of 34.8%

 Net profit up 57.7% to EGP 622.1 million

 Net real estate sales for Q2 2023 increased by 78.1% to EGP 4.7 billion

Pursuing the same momentum since the beginning of 2023، ODE once again delivers stellar financial and operational results. ODE continued to deliver on its strategy and growth pattern thanks to its diversified lines of business confirms the company’s strong positioning in the industry as well as its viability across any future crisis. Despite the ambiguity witnessed on a global، regional، and local scale، ODE’s performance is nothing short of exemplary. ODE's financial performance during the first half of 2023 demonstrates our capability to continually enhance our performance through effective management of its operational efficiencies despite being affected by EGP 334.6 million non-cash foreign exchange loss during 1H 2023. As a direct consequence of our enhanced capacity to scale our operations، we have seen both an increase in Adj. EBITA، EBITDA and margins. Owing to ODE's unwavering commitment to innovation، talent and operational excellence، the company was able to increase its real estate sales، lift profitability، and drive customers happiness and shareholders value.

Financial Review:

1H 2023:

During 1H 2023 ODE recorded a total revenue of EGP 6.2 billion، up 62.2% y-o-y. Profitability continued to improve despite a challenging market environment as reflected in revenues، gross profit، and net profit results. ODE saw a 63.1% increase in gross profit to reach EGP 2.1 billion (1H 2022: EGP 1.3 billion) with a margin of 34.6% vs. 34.4% in 1H 2022. The boost in revenues and gross profit reflects our operational excellence and are also a result of the acceleration of our construction activities، with real estate revenues reaching EGP 4.0 billion، an increase of 53.4% vs. 1H 2022، in addition to the enhanced business performance of the hotels and town management segments. Adj. EBITDA increased by 65.1% to EGP 2.3 billion in 1H 2023 and a 37.0% margin compared to EGP 1.4 billion and a margin of 36.4% in 1H 2022. Other gains and losses reported a loss of EGP 451.0 million vs. a loss of EGP 120.5 million in 1H 2022. The FX translation loss is mainly related to the devaluation of the EGP. Finance cost increased by 213.7% to EGP 481.2 million in 1H 2023 (1H 2022: EGP 153.4 million) due to the increase in interest rates plus the finance cost related to O West debt.

This operational excellence was reflected in our bottom-line figures، with net income up 17.2% to EGP 1.0 billion in 1H 2023 (1H 2022: EGP 858.3 million). It is worth mentioning that adjusted net income excluding one-offs (which includes forex losses or gains along with any non-operational one-off transactions) would have increased by almost 48.9% from EGP 978.8 million in 1H 2022 to EGP 1.5 billion in 1H 2023.

Strong Balance Sheet:

During 1H 2023، our cash and cash equivalent balance reached EGP 4.1 billion. Total bank debt excluding ODH debt stood at EGP 7.9 billion in 1H 2023 (FY 2022: EGP 3.8 billion) and net debt reached EGP 3.9 billion. The increase in debt amounts is mainly a result of the depreciation of EGP against foreign currencies.

Q2 2023:

With strong operating and financial results، ODE’s second quarter underlines our execution capabilities and strength، even in the face of significant headwinds. Topline performance remained strong، with revenues up by 71.7% to EGP 3.2 billion (Q2 2022: EGP 1.9 billion). Gross profit increased by 65.6% to EGP 1.0 billion in Q2 2023، with a gross margin of 32.3%. Adj. EBITDA also increased by 68.7% to EGP 1.1 billion with a 34.8% margin. In line with this background، net profit increased by 57.7% to EGP 622.1 million (Q2 2022: EGP 394.6 million).

Group Real Estate: Net real estate sales for 1H 2023 reached EGP 7.5 billion، a growth of 59.9% over last year and the highest first-half sales figures in ODE’s history.

New sales for Q2 2023 reached EGP 4.7 billion، a 78.1% increase from EGP 2.7 billion in Q2 2022. That brings our 1H 2023 real estate sales value to EGP 7.5 billion، a 59.9% increase over 1H 2022 and the highest first-half sales figures in ODE’s history. Despite various global macro and geopolitical challenges، our operations continued to progress during Q2 2023. We had a robust quarter with strong demand in O West complemented by solid sales momentum in El Gouna and Makadi Heights. O West was the group’s largest contributor to new sales (47.5%)، followed by El Gouna (38.5%) and finally Makadi Heights (14.0%). We continued to increase our average selling prices per sqm across all destinations، whereby El Gouna’s average selling prices increased by 82.1%، O West prices by 43.8%، and Makadi Heights prices increased by 19.0% vs. 1H 2022. Real Estate revenue continued with its positive performance and increased by 53.4% to EGP 4.0 billion (1H 2022: EGP 2.6 billion)، while Adj. EBITDA also increased by 51.9% to EGP 1.7 billion vs. 1H 2022. Real estate cash collections for the period increased by 45.7% to EGP 4.1 billion vs. EGP 2.8 billion in 1H 2022. Total deferred revenue from real estate that is yet to be recognized until 2027 increased by 30.0% to EGP 18.2 billion (1H 2022: EGP 14.0 billion). The real estate receivables portfolio has also increased by 36.5% to reach EGP 25.4 billion during 1H 2023.

Group Hotels: A quantum leap in the hospitality portfolio in 1H 2023 and outperforming the broader Hospitality Market in Egypt with revenues up 118.2% to EGP 1.4 billion.

ODE hotels' proven business model once again delivered impressive quarterly results despite various macro and geopolitical challenges around the globe. Q2 2023 performance reflects the positive impact of the return of inbound tourism، with both occupancy and ARR levels benefiting from positive year-on-year change driven by the return of both corporate and leisure inbound tourists. Q2 2023 revenues increased by 117.0% to EGP 808.7 million (Q2 2022: EGP 372.6 million)، pushing our GOP to EGP 414.5 million، a 157.1% increase (Q2 2022: EGP 161.2 million). Accelerating TRevPAR growth expanded our operating leverage and led us to generate EGP 352.4 million of Adj. EBITDA up 197.6% vs. EGP 118.4 million in Q2 2022. Total revenues for the hotels during 1H 2023 increased by 118.2% to EGP 1.4 billion (1H 2022: EGP 633.2 million)، GOP also increased by 182.1% to EGP 746.4 million (1H 2022: EGP 264.6 million). The segment’s Adj. EBITDA increased by 210.5% to EGP 579.1 million in 1H 2023 (1H 2022: EGP 186.5 million) on the back of further improvements in operational efficiencies.

Group Destination Management: Strong recurring income growth، with revenues up 40.4% to EGP 808.3 million

For the second quarter، the destination management segment continued to grow in a very healthy way، both from a margin perspective as well as from a revenue perspective، reaping the benefits of the successful restructuring implementation. Revenues in Q2 2023 increased by 47.6% to EGP 442.5 million (Q2 2022: EGP 299.7 million) while Adj. EBITDA also increased by 207.9% to EGP 135.8 million in Q2 2023 (Q2 2022: EGP 44.1 million). Revenues for the town management segment during 1H 2023 increased by 40.4% to EGP 808.3 million (1H 2022: EGP 575.8 million) while Adj. EBITDA also increased by 97.7% to EGP 241.6 million in 1H 2023 (1H 2022: EGP 122.2 million).