Numbers above are rounded
KUWAIT – May 16, 2021 – Agility, a leading global logistics provider, today reported its first quarter 2021 earnings of 6.01 fils per share on net profit of KD 12.6 million, an increase of 28.7% over the same period in 2020. EBIT increased 31% to KD 26.9 million, and revenue increased 28.6% to KD 485.5 million.
Tarek Sultan, Agility Vice Chairman and CEO, said: “Agility started 2021 on a good note. Agility’s Global Integrated Logistics business performed well, with favourable market conditions as well as cost controls playing an important role. Agility’s Infrastructure companies overall are showing strong signs of recovery from the effects of the global pandemic. These Infrastructure businesses contributed an average of 80% of Agility’s EBIT over the past 5 years.”
Regarding Agility’s recent decision to sell its core commercial logistics business, Sultan said, “Going forward, Agility’s agreement with DSV Panalpina for DSV to acquire Agility’s Global Integrated Logistics business allows us to retain the assets generating the bulk of our operating profit, while taking advantage of the scale, experience, operational excellence and possibilities offered by working with DSV, one of the industry’s top performers. It also creates the flexibility and resources to reposition the company for its next chapter of growth.”
For Q1, the GIL numbers are fully consolidated on a line-by-line basis. However, going forward and until the deal closes, the consolidation will be done on a limited basis, as per IFRS 5, that accounts for non-current assets held for sale. GIL numbers will be summarized in the respective statement of the financial statements, rather than broken down on a line-by-line basis.
The Board of Directors also discussed and approved a forward looking minimum cash distribution policy recommendation of 20 fils per share and it might include treasury share buyback for the coming three (3) years.
The Board of Directors may at its sole discretion consider recommending additional forms of dividends and/or increasing the above mentioned guidance. As with all such recommendations, the distributions will be subject to the approval of the General Assembly of the Shareholders as well as the concerned authorities at the time of the distribution.
Agility Global Integrated Logistics (GIL)
In Q1, GIL achieved EBIT of KD 16.4 million, a 936.1% increase from same period a year earlier. The increase was driven by favourable market conditions in Freight Forwarding and growth in Contract logistics, along with strong cost controls.
GIL Net Revenue reached KD 77.2 million, up 16.2% from Q1 2020. The Net Revenue increase was a result of an increase in Freight Forwarding and Contract Logistics Net Revenue.
Air Freight Net Revenue increased as a result of higher volumes, yields and exceptional charter activity driven by current market situation. In Q1 2021, tonnage surged 14.8% over Q1 2020 levels.
The Ocean Freight Net Revenue increase was mainly a result of improved yields. Worldwide effective ocean capacity shrunk as volumes rebounded, particularly in Asia Pacific and Europe.
Q1 Contract Logistics growth came mainly from Asia Pacific (China, Hong Kong, Singapore) and MEA (Saudi Arabia, Dubai and Kuwait), where there was continued strong performance. Fairs & Events and Projects Logistics, both hurt by the pandemic, saw declines in Net Revenue.
Agility’s Infrastructure Companies
Agility’s Infrastructure group EBIT grew 2.2% to KD 24.7 million for the first quarter of 2021. Infrastructure group gross revenue was flat. Entities within the Infrastructure group are pursuing their growth strategies and have begun to recover from downturns caused by the pandemic. The Infrastructure group remains the main contributor to the group’s profitability.
Agility Logistics Park (ALP) revenue declined 10.2% in the first quarter due to the loss of revenue from Amghara land in Kuwait. This decrease was partially offset by an increase in revenue from Saudi operations. ALP continues to see strength in demand for warehousing space. Agility’s development strategy is to increase its land bank across the countries where it operates. ALP’s expansion and development in Africa continues as planned. In the Middle East, Agility’s Logistics Park in Riyadh is almost fully developed; and in Kuwait, ALP is looking to optimize existing assets and will kick-off the Sabah Al Ahmed project development in July.
Tristar, a fully integrated liquid logistics company, posted almost a flat Q1 revenue. However, the company was able to record single-digit profitability growth, mainly due to improved performance in its fuel business. Tristar’s long-standing relationships and repeat business with blue-chip clients have been key enablers of its success.
After a difficult 2020, National Aviation Services (NAS) profitability returned to pre-COVID levels in Q1. Despite a significant drop in flight volumes across its network and a 7% drop in revenue, NAS implemented cost cuts and controls that yielded results. In addition, NAS successfully launched new operations at Baghdad International Airport and introduced several new health service offerings. Cargo remains a positive part of the business, whilst passenger lounges remain depressed.
United Projects for Aviation Services Company (UPAC) experienced a 38.7% Q1 decline in revenue, primarily due to the cessation of operations at the Kuwait International Airport and the continuation of pandemic-related travel restrictions. UPAC continues to take various measures to reduce the negative impact on its business. The vaccination program underway in Kuwait is expected to generate renewed air travel and a gradual recovery in air traffic by Q3.
At GCS, Agility’s customs modernization company, revenue increased 8.3%. GCS is seeing signs of recovery and increased trade volumes. GCS is examining new customs modernization opportunities and ways of diversifying its income.
Sultan said: “Agility’s Infrastructure companies have been solid, stable performers over the years, with each company pursuing its own growth strategy. Entities impacted by the pandemic are recovering, and each company is continuing to explore growth opportunities. Agility’s long-term vision is to actively pursue growth in emerging markets and new technologies through these businesses and beyond. The DSV transaction will act as a catalyst to accelerate the pace, as well as expand the scope and scale, of investments in that segment”
Recap of Agility Q1 2021 Financial Performance
- Agility’s Net Profit increased 28.7% to KD 12.6 million. EPS was 6.01 fils vs. 4.67 fils a year earlier.
- Agility’s EBIT increased 31% to KD 26.9 million.
- Agility’s Revenue increased 28.6%, to KD 485.5 million and Net Revenue increased 5.1%.
- GIL Revenue increased 39.6% to KD 379.3 million.
- Infrastructure’s Revenue came in line with last year’s level at KD 110.6 million.
- Agility enjoys a healthy balance sheet with KD 2.3 billion in assets. Net Debt was KD 209.4 million as of March 31, 2021. Reported operating cash flow was KD 40.3 million for the first quarter of 2021, an increase of 52.5%
Sultan said: “Agility is committed to maximizing shareholder value. Agility’s investment in DSV in exchange of the GIL business gives Agility an 8% stake in one of the industry’s largest and best-performing logistics companies, while retaining profitable, high-value assets in emerging markets. Agility’s profitable portfolio of Infrastructure companies, including Agility Logistics Parks, our aviation services company, NAS, our fuels logistics company, Tristar, and our trade-enabling Shipa businesses, will continue to grow. At the same time, we will continue investing in new technologies, as well as in digital enablement for the supply chain, while exploring areas of future potential business cooperation between Agility and DSV.”
Agility is a global logistics company with $5.3 billion in annual revenue and 26,000+ employees in more than 100 countries. It is one of the world’s top freight forwarding and contract logistics providers, and a leader and investor in technology to enhance supply chain efficiency. Agility is a pioneer in emerging markets and one of the largest private owners and developers of warehousing and light industrial parks in the Middle East, Africa and Asia. Agility’s subsidiary companies offer fuel logistics, airport services, commercial real estate and facilities management, customs digitization, and remote infrastructure services.