Our first half result of 2024 testifies to our adept navigation of a challenging macroeconomic landscape affecting all Egypt’s business environments. Despite grappling with a non-cash foreign exchange loss of EGP 2.2 billion in 1H 2024, ODE’s financial performance underscores our unwavering focus on consistently enhancing operational efficiencies. Our resilient and diversified business model has effectively tackled inflationary pressures, with significant contributions stemming from our deep-rooted commitment to innovation and operational efficiency in overcoming hurdles. The outcome of our bolstered operational capabilities is evident in the growth of revenues, adj. Ebitda and margins.
Financial Review:
Q2 2024:
With impressive operating and financial outcomes, ODE’s second quarter highlights our adept execution capabilities and resilience in the face of significant challenges.
- Robust revenue growth: In Q2 2024, our performance excelled, achieving a remarkable 86.4% surge to EGP 6.0 billion. Our operational strength manifested across all business segments, with a notable 44.3% increase in real estate revenues and substantial growth of 42.5% and 44.3% in the hospitality and commercial asset segments, respectively. Furthermore, the EGP 1.3 billion land sale revenue contributed significantly to our overall financial results.
- Gross profit: The quarter’s gross profit surged by a tremendous 164.1% to EGP 2.8 billion, with a substantial gross margin of 45.8% compared to 32.3% in Q2 2023. This increase underscores our commitment to operational excellence.
- Significant Adj. EBITDA improvement: Adjusted EBITDA surged by 164.7% to EGP 3.0 billion, boasting a 49.4% margin, a substantial improvement from 34.8% in 1H 2023.
- Tremendous net income performance: Furthermore, in alignment with these achievements, the company’s net profit soared by 209.8% to EGP 1.9 billion, marking a significant milestone for ODE in line with all its impressive achievements.
1H 2024:
ODE reported prosperous first-half results, showcasing significant growth despite facing challenges from the devaluation of the EGP. Yet, we have effectively navigated these challenges to deliver strong performance in other areas.
- Revenue growth: ODE achieved a record revenue of EGP 10.2 billion, an impressive 64.9% increase versus 1H 2023.
- Real estate revenue: up by a solid 42.5% to reach EGP 5.7 billion compared to 1H 2023, with a margin of 41%.
- Recurring income segments: ODE witnessed exceptional growth in recurring income segments, including hotels and commercial assets. These contributed EGP 3.2 billion to total revenue, an impressive 45.1% increase.
- Gross profit: Soared by a significant 95.2% to EGP 4.2 billion, boasting a healthy margin of 40.9% vs. 34.6% in 1H 2023. This improved performance underscores our operational excellence, resilience in the face of inflation, and the positive impact of key strategic initiatives such as the EGP 1.6 billion land sale in El Gouna and accelerated construction activities.
- Significant Adj. EBITDA improvement: Adj. EBITDA showed robust growth, expanding by 98.8% to a record EGP 4.6 billion, with a margin of 44.6% in 1H 2024.
- Other gains and losses: Other gains and losses reported a loss of EGP of 2.3 billion, mainly attributed to foreign currency debt due to the devaluation of EGP.
- Finance costs: up by 78.1% to EGP 856.9 million, primarily due to rising interest rates, which will be monitored closely.
- Strong net income performance: ODE’s adjusted net income, excluding one-offs (which includes forex losses), increased by 135.7% from EGP 1.3 billion in 1H 2023 to EGP 3.2 billion in 1H 2024. Meanwhile, the reported net income during 1H 2024 reached EGP 942.7 million compared to EGP 1.0 billion.
- Cash from operations: our cash flow from operations reached EGP 3.8 billion, driven by improved operational performance across all business segments. This robust growth underscores our commitment to operational excellence.
- Strong cash balance: On the balance sheet side, the company continued to preserve a healthy balance sheet and monitor its cash balances and liquidity. Our cash balance reached EGP 7.4 billion during 1H 2024, and our foreign currency cash stood at USD 70 million. Our net debt reached EGP 3.1 billion during 1H 2024.
Group Real Estate: Our real estate business has set new operational and financial records, with a 110% increase in net real estate sales reaching EGP 15.7 billion, demonstrating ODE’s robust brand equity.
The sales figures for Q2 2024 reveal a substantial upsurge, reaching EGP 6.9 billion, signifying a 46.2% surge from EGP 4.7 billion in Q2 2023. This accrual brings our total real estate sales value to EGP 15.7 billion, demonstrating a remarkable 109.5% increase over the preceding period and setting a new milestone for first-half sales in ODE’s history. Notably, our international sales remain a core focus, comprising nearly 40% of our real estate sales, a testament to ODE’s strong market presence and the trust of our customers. The sales growth is further fueled by a 6.6% rise in the number of units sold, to reach 873 units compared to last year. El Gouna continues to lead new sales contributions at 50%, followed by O West at 36% and Makadi Heights at 14.0%. We have also continued to increase our average selling prices per sqm across all destinations. The combined growth in sales and construction pace has bolstered our real estate revenue by 44.3% to EGP 2.9 billion in Q2 2024. This brings our total real estate revenues for 1H 2024 to EGP 5.7 billion, reflecting a 42.5% increase over 1H 2023—meanwhile, Adj. EBITDA increased by 36.8% to EGP 2.3 billion in 1H 2024, with a margin of 41%, reaffirming our commitment to operational excellence. In 1H 2024, we experienced a 78.9% increase in real estate cash collections, which amounted to EGP 7.4 billion. Furthermore, the total deferred revenue from real estate that will not be recognized until 2027 has increased by 66.4% to EGP 30.3 billion, providing strong visibility on our real estate revenue across all our destinations over the next 3-4 years.
Group Hotels: In the first half of 2024, the hospitality portfolio experienced a remarkable 34.0% increase in revenues, reaching EGP 1.9 billion, despite facing numerous geopolitical challenges throughout the Middle East.
ODE Hotels’ well-established business model once again delivered exceptional quarterly results despite facing various macro and geopolitical challenges worldwide. Our hotels achieved revenues of EGP 1.2 billion, marking a notable 42.5% increase over Q2 2023. This revenue growth drove our GOP to EGP 517.9 million, demonstrating a solid 24.9% rise from Q2 2023. The ability of our hotels to maintain high occupancy rates and enhance room rates has been instrumental in fueling this growth. Despite the conflict in Gaza, we have managed to sustain a healthy margin and achieve robust financial outcomes. We have achieved an Adj. EBITDA of EGP 578.8 million, representing a significant 64.2% increase from Q2 2023, with a substantial margin of 50.0%. In 1H 2024, total hotel revenues increased by 34.0% to EGP 1.9 billion, with GOP also rising by 18.8% to EGP 886.7 million compared to the previous year—moreover, Adj. EBITDA surged by 49.4% to EGP 865.1 million in 1H 2024, with an improved margin of 47% compared to 42%, driven by ongoing enhancements in operational efficiencies. This robust financial performance underscores our hotels’ resilience and adeptness at navigating a challenging market environment. Substantial investments have been allocated to elevate our properties, including upgrades to facilities and enhancements in technological infrastructure, all aimed at ensuring an exceptional guest experience. As we continue to monitor the industry’s evolving challenges, we remain committed to adjusting our strategies accordingly to deliver strong financial results and unmatched customer service.
Group recurring income assets: Strong recurring income growth, with revenues up 64.2% to EGP 1.3 billion.
Our commercial assets segment remains a dependable source of cash flow, playing a critical role in funding the group’s expansion and safeguarding against the cyclical downturns precipitated by unforeseen events. Revenue for Q2 2024 surged by 55.3% to EGP 687.3 million, while Adj. EBITDA also rose by 78.1% to EGP 241.8 million over Q2 2023. This elevates our commercial assets segment revenue to EGP 1.3 billion during 1H 2024, a 64.2% increase compared to 1H 2023. Adj. EBITDA reported a 98.3% increase to EGP 479.1 million, creating a margin of 36% in contrast to 30% in 1H 2023.
