In a challenging market for many logistics providers, Agility saw a modest increase in revenues, up 1.8% annually reaching KWD*1,578.6m. EBITDA jumped 24.7% but this was mainly due to IFRS-16 changes; on a pre-IFRS 16 basis EBITDA improved by 5.6%.
“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 digitisation also had an impact; one that we believe will continue in 2020,” said Tarek Sultan, Agility Vice Chairman and CEO.
Agility Global Integrated Logistics (GIL) experienced a year-on-year decrease of 2.5% in reported revenues to KWD1,124.6m but growth remained flat on a constant currency basis. EBITDA was KWD35.4m, declining 1.2% in comparison to 2018 figures. The decline was primarily due to the costs associated with its digital transformation strategy.
Agility saw weakness in both air and sea freight volumes, with growth rates of -6.8% and -0.6% respectively. This volume growth is weaker than Ti’s previous projections for the market. The company saw a decline in air freight volumes for three consecutive quarters, most notably in the third quarter where volumes fell by 15.8%. However, the decline in volumes was partially offset by higher yields.
Throughout 2019, Contract Logistics achieved healthy growth, primarily in the MEA region but also in the US, Australasia and Singapore. Project Logistics also experienced solid growth throughout the year.
Agility’s Infrastructure business segment revenues grew 14.0% in 2019; EBITDA also grew 7.7%. On a year-to-year basis, Tristar experienced revenue growth of 10.9%, Agility Logistics Parks reported 14.9% growth in 2019, United Project for Aviation Services Company’s revenue decreased by 2.2%, National Aviation Services’ revenue increased by 7.8% and GCS’s revenue grew by 8.8%. The company has stated that going forward it will invest further in these companies to drive future growth.
Agility’s experience over the past 12 months is similar to its large rivals, as was its ability to sustain profit margins. However, the weak air freight volumes indicate that despite its ability to cling onto respectable margins, Agility may be in for a difficult year. 2020 is already proving to be a challenging, uncertain environment for forwarders. Concerns surrounding trade war tensions have been replaced by the coronavirus outbreak. However, Agility has stated that it is well positioned to tackle these upcoming challenges. Only time and next years’ results will reveal how prepared it truly was.
*$= KWD0.31/ €= KWD0.34
Source: Transport Intelligence, March 03, 2020
Author: Beth Poole