Agility (AGLTY) continues to report rising profitability for the first half of 2009, despite the ongoing global economic recession. For the first half of the 2009 fiscal year, whilst revenues declined 9% to KWD 821.0 million compared with 1H 2008; operating profits increased 5% to KWD 83.3 million. Net profit stands at KWD 74.9 million and EPS at 74.9 fils, an increase of 3% and 7% respectively compared to 1H 2008.

Adjusted for non-recurring items, Agility’s 1H 2009 net profit stands at KD 78.4million and EPS at 78.4 fils, reflecting a growth of 13.5% and 17.8% respectively over the same period last year.

“Despite being faced with reduced volumes in freight forwarding since the start of the economic downturn, I believe that our strong financial performance in the first half of 2009 is a testament to our “agility” and continued emphasis on driving efficiencies,”  said Tarek Sultan, Chairman and Managing Director of Agility. “We are seeing those efforts pay off in the form of important customer wins, lower operating expenses, improved margins, and a strong balance sheet. In this current environment of economic uncertainty, however, we also continue to focus on working capital management, a favorable net debt position, and healthy cash generation from our operations.”

Financial Highlights: Healthy cash flow and strong balance sheet

Agility continues to generate cash from operations, currently at KWD 130.6 million; a growth of 42% over the previous period.  Agility also continues to hold a strong balance sheet showing an improvement in working capital, and cash position of KWD 329 million, and net debt of KWD 82 million.

“In the past we invested more than 60% of our capex in our logistics business in the emerging market and we are now seeing the returns on that investment as the Middle Eastern commercial logistics market continues to grow amidst this crisis” said Sultan. “Our government business is also continuing to grow and acts as a further hedge during this downturn.” 

GIL: Operational transformation translates into growing margins

GIL revenues stand at KWD 492.8 million, a decrease of 15.8% compared to the first half of 2008. GIL’s revenue decline is largely due to reduced trade volumes; as the commercial logistics industry continues to be affected by the financial crisis. However, despite the revenue decline, GIL posted a net revenue growth of 1.2% to stand at KWD 153.6 million, compared with KWD 151.8 million in 1H 2008. Net Revenue margin expanded to 31.2%, an improvement over 1H of 2008 which stood at 25.9%. The margin improvement is a result of GIL’s ongoing success in procuring competitive rates through major suppliers. 

GIL’s approach to building a best-in-class platform involves three strategic imperatives: growth, performance, and innovation. The first strategic imperative focuses on growth, both through the acquisition of new customers and through expanding the network by adding new geographies and services. The second strategic imperative targets financial and operational performance by reducing costs and improving internal efficiencies. The third strategic imperative focuses on driving innovation, by continuing to refine the operating model and through strong people management.

There has been notable progress against these strategic imperatives in this quarter. GIL was awarded an estimated KWD 57.96 million contract by Chevron for supply base operations and transportation services to support the Gorgon gas field project in Western Australia . GIL also expanded network by acquiring its longstanding partner in - Trafinsa S.A. de C.V. and affiliate Trafinsa International, LLC – strengthening Agility’s existing presence in Latin America . Agility also broadened its coverage in Eastern Europe by opening a new subsidiary in . This follows Agility’s expansion into , , and in 2008, and marks another milestone in Agility’s growth/decline strategy in Eastern Europe .

Defense and Government Services: Regional and customer diversification contributes to growing margins

DGS revenues reached KWD 351.3 million, an increase of 4.3% over the first half of 2008 as a result of the growth in contract wins. Net revenue was KWD 120.6 million; a 1.8% growth compared to 1H of 2008.  Net revenue margin stands at 34.3%; almost flat compared to a margin of 35.2% in 1H of 2008. 

DGS’s approach to maintaining its leadership position in government logistics involves three strategic imperatives: growth, diversification, and excellence in execution. The first strategic imperative addresses growth in contract value by increasing business with existing customers or by winning additional work within existing contracts. The second strategic imperative focuses on continued diversification – capturing business from new customers, in new geographical areas, or with new products and services. The third strategic imperative highlights the importance of continuing to execute contracts with operational excellence.

There was notable progress against these strategic imperatives in the second quarter. DGS saw a number of major contract wins including the award of an estimated KWD 405 million option year on the Subsistence Prime Vendor Contract by the U.S. Defense Logistics Agency (DLA). DGS was part of a team that won a an estimated KWD 5.0 million contract to manage the Defense Distribution Depot Guam, Marianas (DDGM), awarded by the Defense Distribution Center. At DDGM, DGS is a joint venture partner in EAS Logistics, which will be a subcontractor to Accent Controls Inc. The DDGM win is the latest in a series of strategic Agility initiatives in Guam .

Infrastructure: Focus of long-term government spend

Agility’s Infrastructure group continues to be the focus of long-term government investment and stimulus spending.  Real Estate, the biggest portion of the division, experienced a revenue increase of 15.3% from KWD 13.2 million in 2008 to KWD 15.2 million and continues to explore ways of maximizing the return on its portfolio.

“Going forward, we are committed to continuing to deliver for our shareholders and customers,” says Sultan. “Agility’s strategy to aggressively manage cost, cash, and capital, expand into emerging markets that are still growing despite the crisis, and diversify our government contracting business, is paying off. We feel confident that we will emerge from these tough times a stronger and more resilient company.”

Source: Transport Weekly