Agility's quarterly operating profit falls 55pc

AGILITY has posted a first quarter 2010 net income of KWD17.6 million (US$60.5 million), down from KWD40.8 million for the fourth quarter of 2009.

First quarter operating profits amounted to KWD18.9 million, a decrease of 55.3 per cent compared to the fourth quarter last year.

"This decline is driven by the reduction in volumes in the defence and government services business and the pressure on Global Integrated Logistics' (GIL) net revenue margins," the company said in a statement.

Cash from operations stood at KWD62 million in the first quarter, a 33 per cent increase over the fourth quarter.

Revenues have declined by KWD67.7 million, or 14.4 per cent, compared to the fourth quarter of 2009, to KWD403 million.

Within this total, GIL revenue decreased by 5.8 per cent when compared to the fourth quarter of 2009 to KWD279.4 million. "This is primarily due to typical seasonality witnessed in commercial logistics when comparing fourth quarter revenues to the current quarter. Nevertheless, underlying business in GIL has grown compared to Q1 2009. Revenues compared to Q1 2009 are 14 per cent higher," said Agility chairman Tarek Sultan in a statement.

"The global slowdown has an ongoing impact on our Global Integrated Logistics (GIL) business."

Revenue for the defence and government business (DGS) declined 28.8 per cent in the first quarter to KWD131.7 million, mainly due to falling volumes in US government contracts as the troops withdraw from Iraq.

"As a result of the US government suspension on new business, the company was unable to supplement this anticipated revenue decline with new revenue growth in Afghanistan and other parts of the world," he said.

US government contracts are said to have historically contributed 25-35 per cent of Agility's annual revenue.

Net profit for the whole of 2009 amounted to KWD156.4 million (US$538.2 million) for 2009, an increase of 10.6 compared to the previous year.

Looking ahead, chairman Tarek Sultan said: "Agility is likely to face declining profitability over the course of the next four quarters, as a result of major US government contracts winding down in Iraq, recovery from the global recession, and the financial impact of the legal dispute with the US government.

"To reverse the decline, we will aim to grow revenue organically, accelerate realisation of return on investment, reduce costs prudently, and maximise yields on core operating assets."

(Source: www.schednet.com)