Agility posts 8.4% rise in Q3 profit on infrastructure business growth
Revenue at Kuwait-based company's logistics unit dips in third quarter, hit by trade war tensions
Kuwait's Agility, one of the biggest logistics companies in the Gulf, posted an 8 per cent year-on-year rise in its third-quarter net profit on the back of growth in its infrastructure business even as global trade tensions affected its logistics unit.
Net income for the three months ending September 30 rose to 21.7 million Kuwaiti dinars (Dh262m), Agility said in a statement to the Dubai Financial Market on Thursday. Third-quarter net revenue climbed 6.5 per cent to 133.3m dinars.
"Our Infrastructure portfolio of companies drove our results in the third quarter, with all major entities seeing growth," Tarek Sultan, Agility vice chairman and chief executive, said. "Our Global Integrated Logistics (GIL) business, on the other hand, was affected by challenging market conditions and trade war headwinds that have affected the industry as a whole."
Agility's infrastructure companies' revenue jumped 13 per cent in the third quarter to 119.7m dinars driven by growth across all of its businesses, led by Agility Logistics Parks.
"Near-term growth will be driven by development of new logistics parks and warehouses in Saudi Arabia and Africa, along with optimisation of the company’s land bank in Kuwait," the company said.
Agility's core logistics business Global Integrated Logistics (GIL) recorded earnings before interest, tax, depreciation and amortisation (Ebitda) of 7.8m dinars, excluding the impact of new IFRS16 accounting rules, a 1 per cent decline from same period in 2018.
GIL posted third quarter net revenue of 67.3m dinars, a 4 per cent increase year-on-year, or 5.3 per cent increase on a constant currency basis.
GIL's overall net revenue increase was driven mainly by growth in ocean freight, project logistics and contract logistics, Agility said.
Air freight volumes fell 15.8 per cent on the back of lower customer demand across industries and regions, it noted.
The decline in volume was partially offset by higher yields — expressed as net revenue per tonne — which increased 15.5 per cent. As a result, air freight net revenue decreased 2.8 per cent compared to the same quarter last year.
Shrinkage in air freight volumes is in line with a global decline in air cargo of 4.5 per cent in September compared to the same month a year ago — the 11th consecutive month of decline in freight volumes and the longest period since the 2008 global financial crisis, industry body International Air Transport Association (Iata) said in its latest report.
"The US-China trade war continues to take its toll on the air cargo industry. October’s pause on tariff hikes between Washington and Beijing is good news," Alexandre de Juniac, Iata's director general said earlier this month. "But trillions of dollars of trade is already affected … and we can expect the tough business environment for air cargo to continue."
Updated: November 14, 2019 04:19 PM