Agility’s profit falls sharply but projects division performs strong
Freight forwarder Agility has recorded a sharp decline in net profit but was able to remain profitable in the first half of 2020. “If the crisis has demonstrated anything, it is the essential value of logistics and supply chain providers in times of severe disruption”, says CEO Tarek Sultan.
The company’s revenue fell slightly from 775 to 765.1 million Kuwaiti Dinar (KWD), which amounts to USD 2.5 billion. The operating profit (ebitda) decreased by 20% to USD 248 million, while net profit fell sharply by 63% to USD 53 million.
Agility has two divisions, Infrastructure and Global Integrated Logistics. While the infrastructure business recorded a decline in the operating result, the logistics business was slightly more profitable than last year thanks to performances of the contract, air freight and project logistics divisions.
While volumes were down in both Air Freight and Ocean Freight by 23.6% (tonnes) and 14.8% (TEUs) respectively, the Air Freight division saw higher yields due to capacity shortages and a spike in demand for urgent shipments of PPE and other medical equipment. As a result, the net revenue of the Air Freight division increased by 17%, while the Ocean business saw sales fall by 16%.
The Contract Logistics and Project Logistics businesses also showed strong performance. Contract Logistics achieved 7% net revenue growth, mainly in the MEA Region (Kuwait, Saudi Arabia) as the result of the addition of new facilities and increased operating efficiencies. Project Logistics showed strong performance across all regions with 25% net revenue increase, driven by new capital projects and positive volume development from existing customers, Agility states.
Combined, the logistics business was able to maintain net revenue in line with last year performance of USD 444 million, while the operating result improved slightly by 1.3% to USD 94 million.
Plan going forward
To maintain profitability going forward, Agility has introduced a range of both temporary and permanent cost reduction measures in response to the pandemic.
“The full impact of Covid-19 is not yet clear, there are many possible scenarios and many unknowns, but we are taking steps to weather the storm and emerge stronger. We are adjusting to the reality on the ground within each respective business, and bringing the cost structure in line with the new levels of business we are seeing. We have a strong focus on cash, with a view to having ample liquidity to cover us for the foreseeable future”, Sultan said.