Agility Reports Earnings Increase of 7% for 2019
Agility, a leading global logistics provider, today reported 2019 net profit of KD 86.8 million, or 52.14 fils per share, an increase of 7% from 2018. Revenue for the year reached KD 1,578.6 million and EBITDA was KD 193.1 million, increases of 1.8% and 24.7%, respectively.
For the fourth quarter 2019, Agility reported a net profit of KD 23.2 million, or 13.93 fils per share, an increase of 4.4% over Q4 2018. EBITDA for Q4 2019 was KD 50.7 million, an increase of 24.3%, revenue remained flat.
Board of Directors Recommendation
Agility’s Board of Directors has recommended a cash dividend distribution of 20% (20 fils per share), along with 10% bonus shares (10 shares for every 100 shares), subject to approval of the General Assembly.
Agility Consolidated Results
Agility continues to deliver growth despite regional and economic challenges. In 2019, EBITDA grew by 5.6% (pre-IFRS16), following three consecutive years of double-digit growth.
“Global trade tensions, regional economic uncertainty, and financial market pressure in emerging markets all contributed to a challenging year for our logistics business. Internally, the costs associated with our investment in digitization also had an impact; one that we believe will continue in 2020,” said Tarek Sultan, Agility Vice Chairman and CEO. “Driving operational efficiency and better customer service through digitization continue to be a priority. It is an investment in our future.”
Beyond digital, emerging markets also remain a key investment focus. This includes building logistics parks across the Middle East and Africa, the Reem mega-mall project in Abu Dhabi, bringing on new ocean vessels and fuel farms through our fuel logistics subsidiary, and growing rapidly in Africa through our airport services subsidiary.
“We move into 2020 cognizant that we are likely to see volatility in the global economy that may impact our logistics business, as well as slower market activities in certain markets in the Middle East and Africa that may affect certain portfolio companies. That said, we are confident that despite these challenges, we are well-positioned to navigate through them,” Sultan said.
Agility Global Integrated Logistics (GIL)
(All numbers in this section are pre-IFRS 16)
For the full year 2019, GIL EBITDA was KD 35.4 million, a 1.4% decline from 2018. This decline was mainly driven by the costs associated to the acceleration of the digital transformation.
Year-to-date net revenue improved 2.9%. Net revenue growth was driven by strong Freight Forwarding yields; higher warehouse utilization and new facilities in Contract Logistics; and greater contributions from specialty products (Project Logistics and Fairs & Events). GIL consistently executed well on its commercial strategy, showing growth with selected industry verticals that are strategic priorities such as Life Sciences.
Full year 2019 revenue fell 2.5% and remained flat on a constant currency basis. 2019 was a challenging year for the freight forwarding industry as a whole. According to IATA, 2019 witnessed the lowest air freight volumes since 2009. Full Year Air and Ocean Freight volumes decreased by 6.8% and 0.6% vs. 2018 driven by declining market demand, but were offset by higher yields.
GIL fourth quarter EBITDA was KD 10.9 million, a 3.8% decline from same period in 2018. The decrease was due to higher operating expenses related to new Contract Logistics facilities, as well as investments in digital transformation.
GIL’s Q4 net revenue was KD 70 million, a 3.3% increase vs. Q4 2018. The net revenue increase was driven mainly by growth in Project Logistics, Contract Logistics and Fairs & Events. The overall net revenue margin improved to 24.8% in Q4 2019 vs. 23.1% in Q4 2018. GIL gross revenue was KD 282.7 million, a 3.7% decline (or 2.6% decline on a constant currency basis) from same period in 2018.
Q4 Air Freight volume decreased by 7% (in tonnage) as a result of falling trade volumes and lower demand from customers across industries and geographies. This decline in volume was partially offset by higher yields - expressed as net revenue/ton – which increased 1.1% from same quarter last year.
Ocean Freight TEUs grew 1.9%, but Q4 yields declined 2.2% vs. the same period in 2018. GIL Ocean Freight yields were strongest in the Americas and Europe.
Contract Logistics achieved healthy growth, mainly in the MEA Region (Kuwait, Saudi Arabia) but also in the US, Australasia and Singapore. Project Logistics also showed solid growth in multiple countries.
To strengthen performance and its market differentiation, GIL is implementing its digital strategy. By accelerating its digital transformation, GIL intends to enhance customer and supplier connectivity, create innovative customer solutions, increase the efficiency of its business processes, and enable comprehensive business insight.
Agility’s Infrastructure Companies
(All numbers in this section are pre-IFRS 16)
For full year 2019, Infrastructure group’s EBITDA grew 7.7% and revenue increased 14% and for the last quarter of 2019, EBITDA grew 6.1% and revenue increased 12.8%. Agility is investing in these companies to drive its future growth.
Agility Logistics Parks (ALP) reported 14.9% revenue growth for the year, despite challenging market conditions. In Kuwait, ALP’s focus is driving the efficiency and optimizing the use of existing assets. In Riyadh, Saudi Arabia, ALP completed another 120K sqm of warehousing space in 2019. In Africa, developments in ALP Ghana Phase III and Phase I in both Mozambique and Ivory Coast are approaching completion.
Tristar, a fully integrated liquid logistics company, posted 10.9% revenue growth in 2019, mainly from Fuel and Maritime improvements. Fuel sales increased mainly in Africa and Yemen. Additionally, improvements were realized in the Road Transport and Warehousing (RTW) segment coming from new contracts. Tristar is focusing on a growth strategy across all business segments. New vessels in the Maritime segment are expected in second half of 2020. RTW will continue to ramp-up existing contracts with mining companies and oil majors. In addition, Tristar is investing in new fuel farms in Africa.
National Aviation Services (NAS), the fastest growing aviation services provider in emerging markets, grew revenue by 7.8% in 2019. Favourable market conditions in some markets where NAS operates, coupled with successful turnaround efforts, contributed to this growth. As part of its strategy to expand within the African Continent, NAS is in the process of launching new operations in several new markets.
United Projects for Aviation Services Company (UPAC), a leading real estate and facilities management company operating in Kuwait, posted 2.2% revenue decline in 2019 compared with same period in 2018. UPAC operations are still being affected by the shift in passenger traffic to dedicated airline terminals at Kuwait International Airport. UPAC has been able to partially offset the impact by generating new revenue from car park management operations in (T4) and through the strong performance of its real estate management operations in Kuwait. In Abu Dhabi, construction continues to progress on Reem Mall, a $1.2 billion project.
GCS, Agility’s customs modernization company, posted 8.8% growth in revenue in 2019. This was driven by new brokerage business and other services to support its core business. GCS is implementing initiatives to drive efficiency and improve profitability.
Since 2011, Agility’s EBITDA reported a 14% compounded annual growth rate and generated a 25% IRR to its shareholders.
“We are proud that in addition to our financial performance, we are focused on driving innovation in our industry and enhancing our digital logistics offering. We also continue to make strides in our sustainability goals,” Sultan said.
“We will continue to invest in the business to drive efficiency and seed future growth, even as we confront concerns about downward pressure on global trade volumes, uncertain growth prospects, and ongoing trade frictions between large economies. As always, we thank our employees, our customers, our shareholders and our partners for their engagement and support.”
Financial Performance for the full year 2019
• Agility’s net profit stands at KD 86.8 million, a 7% increase from KD 81.1 million in 2018. EPS was 52.1 fils, compared with 48.7 fils a year earlier.
• EBITDA was KD 193.1 million, a 24.7% increase from 2018.
• Agility’s revenue for 2019 was KD 1,578.6 million, an increase of 1.8% from KD 1,550.2 million in 2018. Net revenue increased by 6.7%.
• GIL’s revenue was KD 1,124.6 million, a 2.5% decline from 2018. However on a constant currency basis it remained flat compared to last year.
• Infrastructure group revenue was KD 469.7 million, compared with KD 412 million in 2018, a 14% increase from last year.
• Agility enjoys a healthy balance sheet with KD 2,082.1 million in assets. Its net debt position was KD 308.2 million as of Dec. 31, 2019. Operating cash flow was KD 151.5 million for full year 2019.
Agility builds durable, efficient supply chains that power businesses and drive trade, creating access to new opportunities.
Agility is one of the world’s largest integrated logistics providers with more than 22,000 employees and operations in 100 countries.