Report shows GST will drive growth despite jolt from recent move to replace currency notes
BAAR, Switzerland – July 19 2017 – The shift to a unified national tax has set off a wave of change in India’s notoriously inefficient logistics sector as companies alter the way they store, move and account for goods, the Agility Mid-Year Emerging Markets Review finds.
India’s Goods and Services Tax (GST), introduced July 1, rolled more than a dozen state and federal levies into a single tax. The GST is already prompting logistics providers and their customers to consolidate warehousing, revamp road freight strategies, and invest in system upgrades to improve the efficiency of their supply chains.
The GST could cut logistics costs in India’s formal, organized logistics sector by 20% and provide a dramatic boost to the country’s surging economy, according to the Agility report, which also examines the impact of the UK’s Brexit on emerging markets.
Essa Al-Saleh, CEO of Agility Global Integrated Logistics, says the GST and other changes encourage long-overdue investment in Indian infrastructure. “The GST eliminates borders and checkpoints between India’s 29 states, paving the way for big efficiency gains,” Al-Saleh says. “Companies can carry less inventory, move to hub-and-spoke warehousing, take advantage of long-haul trucking, and look to third-party logistics providers to improve operations and save.”
The Agility report was prepared by Transport Intelligence, a leading analysis and research firm for the logistics industry. The report indicates that India’s overnight decision in late 2016 to introduce new bank notes sapped economic growth and curtailed activity in the country’s massive, cash-based informal sector of small merchants, truckers and others. But it concludes that the impact of “demonetisation” will be short-lived.
In its look at Brexit, the Agility report highlights hurdles faced by the UK in its effort to “cut and paste” existing European Union trade rules into an exit agreement with the EU. The more difficult the terms of a UK-EU divorce, the more likely the UK is to seek ambitious new trade deals with emerging markets countries, particularly Commonwealth countries in Southeast Asia and Africa, the report finds.
Brexit leaves key emerging markets exporters – South Africa, Kenya, Turkey and others – exposed because the value of the pound has declined and the UK economy is expected to be smaller as a result of the UK’s departure from the EU.
The Agility report also suggests that emerging markets countries using the UK as a gateway to Ireland and other EU countries will need to find new routes to those markets. UK exports to the EU could face burdensome checks and customs procedures unless the UK hews to EU product standards and British transporters conform with EU transport rules.
Agility partners with Transport Intelligence to produce the annual Agility Emerging Markets Logistics Index, a ranking of the world’s 50 leading emerging markets and a survey of more than 800 global logistics industry professionals.
UK may lose role as gateway to Ireland, other EU markets
BAAR, Switzerland – July 19, 2017 – The UK will try to spark its economy through trade with emerging markets if it is unable to preserve the basic outlines of its current relationship with European Union trading partners, says the Agility Mid-Year Emerging Markets Review.
The UK government has expressed the desire to maintain something akin to its existing trade relationship with the EU, but the EU’s chief negotiator has said “frictionless trade” is “not possible” following Brexit.
The more difficult the UK-EU divorce, the more likely the UK is to seek ambitious new trade deals with emerging markets countries, particularly Commonwealth countries in Southeast Asia and Africa, the Agility report indicates. Brexit leaves key emerging markets exporters – South Africa, Kenya, Turkey and others – exposed because the value of the pound has declined and the UK economy is expected to be smaller in the initial aftermath of the UK’s split with the EU.
The Agility report was prepared by Transport Intelligence, a leading analysis and research firm for the logistics industry. It suggests that emerging markets countries using the UK as a gateway to Ireland and other EU countries might need to find new distribution centers and routes to those markets. Meantime, UK exports to the EU could face burdensome checks and customs procedures unless the two form a new customs union and the UK hews to EU product standards.
Essa Al-Saleh, CEO of Agility Global Integrated Logistics, says it is too soon to know how UK-EU negotiations will go, “but apart from the political hurdles, the UK’s desire for ‘frictionless’ trade with the EU faces complex technical obstacles – what to do about tariff-rate quotas, rules of origin, product standards and import duties. Anything that alters existing UK-EU arrangements probably means delays and added cost to the movement of goods.”
In addition to Brexit, the Agility report looks at the impact of India’s decision to replace more than a dozen state and federal levies with a single Goods and Services Tax (GST). The shift to a unified national tax has set off a wave of change in India’s notoriously inefficient logistics sector as companies alter the way they store, move and account for goods, the report finds.
The GST, introduced July 1, is already prompting logistics providers and their customers to consolidate warehousing, revamp road freight strategies, and invest in system upgrades to improve the efficiency of their supply chains. It could cut logistics costs in India’s formal, organized logistics sector by 20%, encourage infrastructure investment, and provide a dramatic boost to the country’s surging economy, according to the Agility report.
Agility partners with Transport Intelligence to produce the annual Agility Emerging Markets Logistics Index, a ranking of the world’s 50 leading emerging markets and a survey of more than 800 global logistics industry professionals.
Agility today announced a settlement in the criminal case involving the U.S. government food-supply contracts that the company held from 2003 to 2010 (the “Prime Vendor Contracts”).
In the criminal portion of the case, Agility agreed to plead to a misdemeanor in connection with a single invoice valued at $551 (KD 167). The misdemeanor is a minor offense, unrelated to any of the original criminal charges, requiring Agility to pay a maximum of $551 (KD 167) in restitution, but no criminal fine.
Agreement to settle the criminal portion of the case is conditional upon Agility signing a separate agreement with the U.S. Department of Justice resolving the pending civil case captioned United States of America, ex rel, et al. v. the Public Warehousing Company, et al., Case No. 1:05-cv-02968-TWT. Any agreements will be subject to final District Court approval.
A settlement, once finalized, will resolve all outstanding criminal issues with the U.S. government in connection with the Prime Vendor contracts for Agility, its affiliates, employees, directors, and officers. The civil proceedings with the U.S. Department of Justice in connection with the Prime Vendor Contracts remain pending.
Separately, Agility also entered into settlement agreements with the Defense Logistics Agency resolving all pending and potential administrative claims between Agility and DLA involving the Armed Services Board of Contract Appeals, and resolving Agility’s suspension from federal government contracting.
The DLA agreements are conditional upon Agility signing a further settlement agreement with the U.S. Department of Justice resolving the pending civil case.
These agreements, once made effective, will allow Agility to resume pursuit of new U.S. government contracts. Under the terms of the settlement, the U.S. government has agreed to remove Agility and its subsidiaries and affiliates from the list of suspended companies on its System for Award Management (SAM) database, formerly known as the Excluded Parties List System (EPLS), within 60 days.
New logistics partner for prestigious Porsche Motorsports racing series
BAAR, Switzerland – May 18th 2017 – Agility, a leading global logistics provider, has signed a three-year logistics partnership agreement with Porsche Motorsports for the seven-weekend Porsche Carrera Cup Deutschland (PCCD) racing series.
Agility is active in a number of industry verticals and the automotive sector is a key area of focus, with the company already serving leading automakers, parts manufacturers and after-market suppliers in Germany and around the world. Agility works with automotive customers to improve visibility, shorten delivery times, cut costs, manage supplier networks and increase efficiency.
“Porsche Motorsports and the teams competing in various series have exacting logistics requirements. This partnership with the PCCD gives us an opportunity to demonstrate our understanding of the special demands of automotive logistics and our ability to deliver under the pressure of race conditions,” said Essa Al-Saleh, CEO of Agility Global Integrated Logistics.
Dr. Frank Steffen Walliser, Porsche Vice President Motorsport & GT-Cars, said, “The German Carrera Cup is one of the most tradition-steeped brand trophies in the world and we welcome Agility to join our select group of partners. We look forward to a long and successful partnership.”
The 2017 edition of the PCCD series opened May 5-7 at Hockenheim and features Porsche 911 GT3 Cup vehicles in 60-kilometer Saturday sprints and 80-kilometer Sunday races.
KUWAIT – May 10, 2017 – Agility, a leading global logistics provider, today reported earnings of 12.7 fils per share on net profit of KD 14.6 million, an increase of 11.4% over the same period in 2016.
Agility reported EBITDA of KD 30.8 million, a 17.4% increase, along with revenue of KD 320.5 million, a 7.3% increase over Q1 2016. The results represent the fifth consecutive quarter of double-digit growth in Agility’s EBITDA, in line with the company’s long-term guidance.
“Our performance has been driven by strong growth in our Infrastructure companies in emerging markets and by the steady progress we have made in improving the underlying fundamentals of our commercial logistics business,” said Tarek Sultan, Agility Vice Chairman and CEO. “We remain on track to achieve our target of $800 million in EBITDA by 2020.”
Agility Global Integrated Logistics (GIL)
Revenue for Agility Global Integrated Logistics (GIL), the company’s core logistics business, grew 6.5% in Q1, to KD 240.3 million. Revenue growth was driven by all products. Air freight volume grew 16% and ocean freight volume grew 12.5% this quarter, both outpacing the market average.
GIL net revenue grew 2% in Q1, increasing in most products and showing a 9% increase in contract logistics over the same period a year earlier. Net revenue margins, 26% in Q1 2016, declined to 25%, mainly because of pressure on rates and tightening capacity on major trade lanes.
GIL EBITDA fell by 12% (7.4% on a constant currency basis) for the quarter, despite revenue and net revenue growth. GIL’s Q1 EBITDA margins were 2.4% vs. 2.9% in Q1 2016. EBITDA decreased because of increased currency fluctuations; ongoing investments in technology development; and increased investment in solutions and growth opportunities in its core markets and verticals.
“GIL is winning new business and containing its costs by driving productivity increases. We believe our strategic focus on trade lanes, solutions and sales excellence will lead to continued growth in freight forwarding volumes this year,” Sultan said.
GIL is investing in profitable and growing contract logistics businesses. New facilities are coming online in the Middle East and Singapore over the course of 2017. GIL is also investing in transforming its business through technology and further strengthening its online solutions for customers.
Agility’s Infrastructure Companies
Agility Infrastructure group EBITDA rose 24.1%, to KD 27.4 million, on revenue growth of 8.6%. Agility Real Estate and Tristar are the main drivers behind the growth.
Agility Real Estate, the largest contributor in the group, increased revenue by 10.8% in Q1. Agility Real Estate is the largest private owner of industrial real estate in the Middle East and Africa, where it is developing new facilities. In Kuwait, Agility is developing more than 900,000 sqm. of warehousing over the next three years.
Tristar is a fully integrated liquid logistics company serving the downstream oil and gas industry with surface transport, ocean shipping, dangerous goods warehousing, fuel farm management and other services. Tristar reported healthy growth in this quarter, driven by new shipping business complimented by its recent E-ships acquisition. Tristar is focused on diversifying its customer base and expanding its shipping business while increasing its productivity.
National Aviation Services (NAS) has become one of the largest ground handling and airport services companies in emerging markets. With a leading position in Africa, NAS will continue to focus primarily on the continent for growth. NAS’s Q1 revenue growth was driven by its Cote D’Ivoire operations, which saw double-digit increases in flight volumes. NAS is also launching operations in Morocco and working on improving yields in its Kuwait business.
UPAC, a publically-listed commercial real estate company, announced earnings of KD 2.2 million, a 14.5% increase over the same period in 2016. UPAC revenue increased 7.4% to KD 3.5 million. UPAC continues to improve its managed projects at the Kuwait airport and Discovery Mall, increasing footfall and demand for space, and achieving 100% utilization. The Reem mega-mall in Abu Dhabi, a planned retail, entertainment, and dining destination of more than 2 million square feet, is key to UPAC’s future growth and development.
Recap of Agility Q1 Financial Performance
Agility’s net profit increased 11.1% to KD 14.6 million in Q1 2017. EPS was 12.7 fils vs.11.4 fils a year earlier.
EBITDA increased 17.4% to KD 30.8 million.
Q1 revenue rose 7.3%, to KD 320.5 million and net revenue increased by 8.6%.
GIL EBITDA fell 12% (7.4% on a constant currency) while its revenue grew 6.5%.
Infrastructure’s revenue grew 8.6% to KD 81.8 million, compared with Q1 2016.
Agility enjoys a healthy balance sheet with KD 1.6 billion in assets. Net debt position was KD 56.4 million as of March 31, 2017. Operating cash flow was KD 24.3 million for the first quarter of 2017, which represents 78.9% of EBITDA.
Agility is entering an investment and growth phase and expects:
EBITDA: double-digit growth
Net profit: growth at a slower rate than EBITDA due to interest expense and minority interest
Free cash flow: limited due to capex program
Debt: move to net debt position from the net cash position maintained over the past six years. Debt ring-fenced at the operating level with limited parent recourse and guarantee.
Deepens high-end service offering for manufacturers, retailers, e-commerce customers
SINGAPORE – March 20, 2017 – Agility, a leading global logistics provider, acquired a two-story warehouse close to Changi International Airport, giving it more than 600,000 square feet of warehouse space in total in Singapore.
The newly acquired 177,000-square-foot warehouse is located in an area with access to an array of logistics services and two major expressways. Agility has operated in Singapore for more than 40 years and employs more than 400 people there. It owns four other warehouses in Singapore.
With an expanded footprint, Agility will be offering more services: automated quality inspections; a container-management e-system; a large-scale recycling program for packing materials; and enhanced warehouse management systems with regional data back-up and business-continuity features.
Mykell Lee, Agility CEO Singapore, said the company’s decision to invest S$25.5 million (US$18.25 million) in the warehouse is a sign of its long-term commitment and belief in Singapore as one of the world’s foremost transportation and shipping hubs. He said the acquisition gives Agility more capacity to add to its value-added service offering, which includes testing, assembly, configuring, labelling and packing.
“We aren’t just storing goods within four walls. In an expensive market like Singapore, customers want service innovation,” Lee said. “We are offering them technology-driven solutions to optimize their supply chains across the region. We have strong infrastructure and well-trained people to help execute that vision.”
Lee said Agility customers want help managing vendors, spare parts and raw materials. In addition, Agility provides tracking and visibility systems that allow customers to keep up with increasingly rapid inventory turns and complex supply chains. “For our fashion and retail customers, for example, we’re also the ones tagging goods with price and security labels, managing reverse logistics, promotions, and warehouse and atrium sales,” Lee said.
Agility’s acquisition comes as Singapore is expanding and upgrading port and airport infrastructure as part of its strategic plan to strengthen its position as a global logistics powerhouse and emerging leader in fast-growing Asian e-commerce. While historically a B2B provider in Singapore, Agility has recently partnered with a number of customers to help expand their supply chains from brick-and-mortar stores to e-commerce home delivery. “The market is moving and creating new opportunities. We are uniquely positioned to grow with our customers in this space.”
Agility to Help Student Teams Pack, Ship Ultra-Efficient Vehicles for Competition
LONDON – March 15, 2017 – Agility, a leading global logistics provider, has signed a partnership agreement with Shell to ship vehicles and offer technical advice to teams of university students competing in the annual Shell Eco-marathon and Drivers World Championship events.
Shell Eco-marathon challenges student teams around the world to design, build, test and drive ultra-energy-efficient vehicles. The competition, held in Singapore, Detroit and London, is split into two classes. Vehicles in the Prototype class are designed for maximum efficiency. The UrbanConcept class features vehicles with more practical designs.
The Shell Eco-marathon Drivers’ World Championship brings together the world’s best UrbanConcept teams to compete in a race to identify the world’s fastest energy-efficient driver.
Agility Fairs & Events will provide the teams with technical advice required to safely pack their vehicles and advise them on customs procedures and requirements. Agility will ship the vehicles and related equipment and will manage receipt, handling and final delivery to the Changi venue in Singapore, to Detroit, and to the Olympic Park venue in London.
“Shell Eco-marathon demands innovative problem-solving, creativity and collaboration from the future engineers and scientists who are competing on three continents,” said Norman Koch, General Manager for Shell Eco-marathon. “Those are qualities we feel we also need from our partners. We are delighted to work with Agility again in 2017 on Shell Eco-marathon.”
Singapore: 16-19 March – Shell Eco-marathon Asia & Drivers World Championship regional competition
Detroit: 27-30 April – Shell Eco-marathon Americas & Drivers World Championship regional competition
London: 25-28 May – Shell Eco-marathon Europe & Drivers World Championship final
Agility’s Financial Results for Full Year and Q4 2016
Agility, a leading global logistics provider, today announced its 2016 financial results, reporting a net profit of KD 59.1 million, or 51.3 fils per share, an increase of 10.6% over the same period in 2015. Revenue for the year stood at KD 1,234.0 million and EBITDA at KD 115.2 million.
For the fourth quarter 2016, Agility reported a net profit of KD 15.7 million with an earnings-per-share of 13.6 fils, an increase of 9.7 % over the same period in 2015. EBITDA for the quarter stood at KD 31.4 million, an increase of 18.4% over last year.
Board of Directors Recommendation
In view of growing optimism and ongoing progress to date with respect to Agility’s 2020 EBITDA target of USD 800 Million, the Board of Directors is proposing a three-pronged distribution recommendation to the Annual General Assembly of the shareholders:
• A cash dividends distribution of 15% (15 fils per share); and
• A bonus shares distribution of 10% (10 shares for every 100 shares) for the fiscal year 2016; and
• A share buyback program to increase Agility’s treasury share inventory up to 10% of its total share capital, subject to and in compliance with the rules and the regulations set forth by the CMA and other relevant regulatory authorities.
Agility Consolidated Results
“Agility continues to steadily improve its financial performance, with Agility GIL closing the year with an EBITDA improvement of 17.0% and Agility’s Infrastructure group showing an EBITDA improvement of 30.1%. Agility generates healthy cash flows, and remains on track to reach its goal of $800 million in EBITDA by 2020.” said Tarek Sultan, Agility CEO. “To reach our target, we are focused on both continuously improving our underlying performance in GIL, while also investing for the future in our Infrastructure companies. Agility is growing its Infrastructure businesses: undertaking a number of major industrial real estate projects in the Middle East and Africa over the course of the next few years, expanding the shipping fleet of its Tristar business, and investing in the Reem mega-mall in Abu Dhabi. Agility’s balance sheet will move towards a net debt position as our Infrastructure companies fund their expansion plan.”
Agility’s Global Integrated Logistics (GIL)
Agility Global Integrated Logistics (GIL) revenues decreased 7.0% to KD 928.4 million over the same period last year. However, GIL’s net revenues grew by 1% on a constant currency basis.
“GIL continues to make progress. Profitability is increasing, with EBITDA margins improving from 2.7% in 2015 to 3.5% over the course of 2016. Volumes are growing: air freight tonnage grew by 9.8% and TEUs grew by 9.3%, with better margins in both air and ocean. Our contract logistics business, with more than 20 million square feet of warehousing space across the globe, also grew by 7.4% this year,” said Sultan. “That said, ongoing pressure on rates, and a Project Logistics business that is impacted by low oil prices and subsequent delays in capital spending, have challenged the top line.”
GIL continues to focus on improving operational performance through technology-driven transformation; strengthening commercial performance through its tradelanes program, sales excellence, and suite of online solutions, and maintaining cost discipline. GIL is also building its leadership pipeline though talent development programs for executives, regional managers and branch managers.
Agility’s Infrastructure Companies
Revenues for Agility’s infrastructure companies grew by 1.1% on a reported basis (14.8% on a constant currency basis). On the EBITDA level, this translates into a 30.1% increase driven mainly by Agility Real Estate and Tristar.
Agility Real Estate continues to be the strongest contributor to Agility’s performance. In 2016, Agility Real Estate opened new distribution centres for Dammam, Saudi Arabia; and opened the first Agility Distribution Park in Ghana, which is fully leased.
Tristar is a fully integrated liquid logistics company serving the downstream oil and gas industry with solutions like surface transport, ocean shipping, dangerous goods warehousing and fuel farm management. The company has a presence in 17 countries spread across the GCC, Africa, Asia Pacific and Central America. Key accomplishments in 2016 included the acquisition of Abu Dhabi based Eships and expanding its fleet of ships; commissioning its first polyethylene silo and bagging facility in the Jebel Ali free Zone, and expansion of the company’s warehousing and logistics infrastructure in Dubai, Abu Dhabi and Oman.
National Aviation Services (NAS) is now present in 12 countries and in more than 30 airports across the Middle East, Africa and South Asia. In 2016, NAS celebrated its one-year anniversary in Cote d’Ivoire, and was awarded a- concession for all of Morocco’s international airports.
UPAC is one of the leading real estate and facility management companies in Kuwait, with key operations within the Kuwait Internal Airport, Sheikh Saad Terminal and Discovery Mall. In 2015, UPAC signed a partnership agreement with the National Real Estate Company (NREC) to develop Reem Mall, a planned two-million square foot mega-mall in Abu Dhabi with 450 shops.
Financial Performance for 2016
• Agility’s net profit stands at KD 59.1 million, a 10.6% increase from KD 53.4 million in 2015. EPS was 51.3 fils, compared with 53.4 fils a year earlier.
• EBITDA stands at KD 115.2 million, a 15.4% increase from 2015.
• Agility’s revenue for 2016 is KD 1,234.0 million, a decrease of 5.3% from KD 1,303.5 million in 2015. Net revenue increased by 5.6%.
• GIL’s revenue stood at KD 928.4 million, 4.7% decrease from 2015 if adjusted for currency impact (-7.0% on reported basis).
• Infrastructure’s revenue was KD 317.9 million compared with KD 314.3 million in 2015, a 14.8% increase from 2015 on constant currency basis (+1.1% increase on reported basis).
• Agility enjoys a healthy balance sheet with KD 1,544.0 million in assets. Net Debt position was KD 45.0 million as of Dec. 31, 2016 (on account of increase in project financed debt in Tristar) and operating cash flow of KD 76.0 million for full year 2016.
“Agility starts 2017 with a strong position and confidence in our direction. We have our challenges, however we also see many opportunities on the horizon and are investing accordingly. We are making bets on the importance of using technology to better serve customers in GIL, as well as investing to grow our Infrastructure companies exponentially,” said Sultan. “We are making good progress towards our 2020 target, and want to thank our customers, employees, partners and shareholders for their ongoing support.” said Sultan.
Move gives Agility increased warehouse space
BIRMINGHAM – March 1, 2017 – Agility, a leading global logistics provider, has expanded its Fairs & Events warehouse and office space by shifting to larger premises within the National Exhibition Centre (NEC) Complex in Birmingham.
Agility Fairs & Events has been based at the NEC for 40 years, making it the longest-standing warehouse tenant at the Birmingham site. The move reflects Agility’s need for additional space to serve customers and gives the company a considerably increased presence at the venue.
“We are fortunate to have found a great facility so close to our current offices at the NEC. Agility Fairs & Events has enjoyed a close working relationship with the NEC for four decades, and we are delighted that we will be able to continue this successful relationship,” said David Richards, Regional Director for Agility Fairs & Events Europe.
The new facility triples Agility’s on-site NEC warehouse space, allowing it to offer specialized services to better serve event organizers, exhibitors and key account clients. Among the services Agility Fairs & Events offers at NEC:
Tailored, multimodal logistics
Customs clearance and liaison
Site handling services requiring forklifts, cranes and Agility’s technical team
Courier shipment management
Storage of exhibition and event materials
“By relocating within the NEC premises, we have been able to limit the impact of the move on our clients and employees. Our new location and enhanced operational efficiencies will help us continue to grow, evolve and keep pace with our clients’ needs, allowing us to provide exceptional value and superior service,” Richards said.
Kathryn James, Managing Director NEC Group Conventions and Exhibitions, said: “We work closely with our organizers and partners to help their businesses grow, and we are delighted that this has been the case for Agility Fairs & Events. We hope that their new premises enables the business to continue expanding.”
Agility Fairs & Events can be found at:
Units 11 / 12
Second Exhibition Avenue
Birmingham, UK, B40 1PJ
[contact-form-7 id="3938" title="01 - Main inquiry form"]