The logistics company posts 12 per cent increase in second quarter profit
Kuwait's Agility expects settlement of US criminal case to help earnings
Kuwait-based Agility, one of the largest logistics firms in the Arabian Gulf, said yesterday it expects the settlement of a US criminal case to help lift earnings in the third and fourth quarters after posting a 12 per cent profit increase in the second quarter.
Income growth in the next two quarters will be buoyed by operations and lower legal fees from the resolution of the case over US food-government contracts, said Tarek Sultan, the company’s chief executive. The impact on earnings will be partially reflected in the third quarter and fully reflected in the fourth quarter, he added.
Agility, once the main food-supplier to the US Army in the Middle East, said in May it had agreed to pay US$95 million to settle the case and will now be able to bid again for US government contracts, which used to be its main source of revenue.
The Dubai and Kuwait-listed company said yesterday its second quarter net profit increased to 16.8m Kuwaiti dinars from 15m dinars in a year-earlier period, thanks to revenue growth in its infrastructure businesses. Revenue grew 10.9 per cent to 342.1m dinars from 308.5m dinars a year earlier.
Investment bank SICO Bahrain had forecast a net profit of 15.86m dinars in the second quarter, according to a Reuters poll.
“Our industrial real estate business and aviation services company delivered particularly strong results,” said Mr Sultan. “Revenue in our logistics business is growing because air and ocean volumes are increasing and contract logistics revenue is expanding, but rate pressure continues to affect profitability.”
The infrastructure business’s earnings before interest taxes depreciation and amortisation (ebitda) increased 7.4 per cent year-on-year to 27.5m dinars in the second quarter, buoyed by growth in its real estate and aviation units.
Meanwhile, its logistics business ebitda, fell 5.8 per cent to 9.1m “primarily due to significant yield degradation in freight forwarding because of capacity constraints and higher market rates.”
Agility has set a goal of reaching an ebitda of $800m by 2020 and it is focusing on investing in infrastructure business in emerging markets and improving its logistics business technology-wise.