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Air Freight grew across multiple trade lanes with very strong performance from strategic customers
In an environment where growth is slowing, Agility has recorded a good start to the year. The Company reported good improvement across the board. On a reported basis, EBITDA increased 22.8% and net profit improved 7.3%.
The Company has reported first quarter earnings of KD20.3 million, an increase of 7.3% from Q1, 2018 (Excluding IFRS-16 Impact it will be an increase of 10.2%). First-quarter revenue was KD378.8 million, and EBITDA was KD 46.3 million, increases of 1.9% and 22.8%, respectively.
Agility’s core logistics business, Agility GIL, continues making significant and important investments in digital transformation that will position it for long-term success and differentiation in the market. Excluding IFRS16 impact, Agility GIL reported Q1 EBITDA of KD6.8 million, a 9.0% decrease compared to the same period a year earlier, the drop is attributable to costs associated with GIL’s digital transformation and commercial investments. Agility GIL first-quarter revenue was KD275.0 million, a decrease of 1.1% from KD278.1 million in the same period a year earlier. Q1 GIL revenue was affected by currency fluctuations. On a constant currency basis, GIL revenue increased 3.4% vs. the same period a year earlier. Net revenue increased to KD65.4 million, a 1.2% increase over Q1, 2018 (excluding the IFRS-16 impact). The net revenue increase was driven primarily by Ocean Freight and Contract Logistics, offsetting decreases in Project Logistics and Road Freight. On a constant currency basis, GIL net revenue growth was 5.1%. GIL’s overall Q1 net revenue margin was 23.8% against a 23.3% a year earlier.
Air Freight tonnage grew 5.2% in Q1 2019; Air Freight grew across multiple trade lanes and sales channels with very strong performance from strategic customers. Ocean Freight net revenue performance was driven primarily by yield improvement and TEU growth of 2.3%. GIL had stable Ocean Freight performance across geographies and sales channels with volume growth primarily from strategic accounts. Q1 Contract Logistics performance was strong, with revenue growth of 3.6%. The Middle East/Africa region (mainly Kuwait, Dubai, Egypt) was the key driver of growth and improved margins.
The Infrastructure group reported EBITDA of KD32.5 million (excluding IFRS 16 impact), an increase of 7.4% in Q1, on a revenue increase of 10.7%. Agility is investing in these companies to drive its future growth. Agility Logistics Parks (ALP) reported 23.0% revenue growth for the quarter, an increase that resulted from strong performance at new facilities completed in late 2018, as well as yield improvement at existing facilities. In Kuwait, ALP’s focus is driving the efficiency of existing assets and identifying new opportunities based on market demand. ALP expects to deliver 150,000 m2 of warehousing space this year, mainly in Saudi Arabia and Africa. It expects to begin construction of another 275,000 m2 of warehousing space to be delivered in 2020/21. With respect to Africa, ALP is currently developing 68,000 m2 of new facilities in Ghana, Mozambique and Ivory Coast, with another 36,000 m2 opening in Nigeria at the end of the year and a planned further 100,000 m2 opening during 2020.
Tristar, a fully integrated liquid logistics company, posted 13.3% revenue growth in Q1, the main drivers for this growth are road transport and warehousing operations, in addition to the shipping business. Tristar continues to grow its business with existing customers as well as expand its customer and geographical reach. In Q1, Tristar signed a five-year charter contract with Shell – with five optional years – to deliver six medium-range products tankers by 2020.
National Aviation Services (NAS), the fastest growing aviation services provider in the emerging markets, grew revenue 3.5% in Q1, 2019. NAS continues on its strategic road map to expand and be the leader in Africa. NAS Cote d’Ivoire delivered double-digit growth; Egypt improved significantly with the launch of a new lounge in Cairo; and Tanzania and Morocco are delivering on their turn-around plans. NAS Uganda is slightly below projections due to a decrease in UN business and commercial flights but is expected to rebound.
At United Projects for Aviation Services Company (UPAC), a leading real estate and facilities management company operating in Kuwait, revenue declined 9.2%, primarily due to the shift of some airline traffic to dedicated terminals, along with a reduction in the number of flights operating out of Sheikh Saad Terminal.
In February 2019, UPAC formally started operations in Terminal 4 (T4), the new dedicated Kuwait Airways terminal. UPAC has a new five-year contract to manage the car parks and related facilities in T4. In Abu Dhabi, construction continues to progress steadily on Reem Mall, the $1.2 billion project set to become the new retail and leisure attraction in the emirate. Reem Mall is scheduled to open in late 2020. UPAC continues to optimise its existing real estate management platform in Kuwait and expand its presence in Kuwait and the region.
GCS, Agility’s customs modernisation company, posted revenue growth of 6.8%, driven by increased trade activity in Kuwait. GCS also added new services and continues implementing initiatives to drive efficiency and improve profitability.