Kuwait-based Agility, one of the largest logistics firms in the Middle East and North Africa, reported a sharp surge in third-quarter net profit after an exceptional gain from the sale of its logistics unit to Danish company DSV Panalpina, it said.
Net profit for the three months ending September 30 reached 926.9 million Kuwaiti dinars ($3.07 billion), up from 15.3m dinars in the same quarter in 2020, Agility said in a statement on Saturday. Adjusted for revaluation impact of investments measured at fair value through profit and loss, net profit from continuing operations increased 17.1 per cent year-on-year to 12.7m dinars.
Third-quarter net revenue rose 30.2 per cent from a year ago to 65.8m dinars.
“We still own and operate the businesses that have historically generated 80 per cent of Agility profits. Our stake in DSV has already appreciated 15 per cent since the sale was announced in April and we expect a return of an estimated $200m a year in cash through dividends and participation in DSV’s share buy-back programme," Tarek Sultan, Agility vice chairman and chief executive, said.
Agility reported an "exceptional gain" in the third quarter from the sale of its Global Integrated Logistics unit to DSV in exchange for shares in DSV, an all-share deal that was finalised in August, it said. The profit from discontinued operations that GIL reported in the third quarter was 918.4m dinars for the third quarter and 952.8m dinars for the first nine months of 2021.
In August, Agility finalised the sale of GIL to DSV in exchange for an 8 per cent stake in DSV, or 19.3 million shares of DSV common stock. This makes Agility the second-largest shareholder in DSV, which is the world’s third-largest freight forwarding company.
“The sale of GIL to DSV has already generated returns for Agility shareholders," Mr Sultan said. "From a strategic standpoint, it allows Agility to maintain global reach and market access to an attractive and growing supply chain industry."
As of the date of closing, the difference between GIL’s equity value and the fair value of Agility’s DSV stake was booked as a one-time, non-cash gain from disposal of discontinued operations, Agility said.
Agility has 3 billion dinars in assets including 1.4bn dinars of DSV shares. Net debt for continued operations stood at 305.4m dinars as of September 30.
Reported operating cash flow was 127m dinars for the third quarter of 2021, an increase of 10.2 per cent from same period last year.
Agility Logistics Parks (ALP) is recording growing demand for warehousing space. ALP is both optimising its existing land bank and growing its supply of available land to meet customer demand, the company said. Operations in Kuwait, Saudi Arabia and Africa are strong and ALP is looking for new markets to achieve additional growth, it said.
Tristar, a liquid logistics company, posted a 26.5 per cent increase in revenue during the third quarter driven by a strong recovery in international oil prices and favourable dry bulk charter rates in the maritime segment.
"We expect this strong performance to continue into the fourth quarter," Agility said.
National Aviation Services reported 77.6 per cent growth in third-quarter revenue, reflecting a recovery in passenger and cargo volumes in its network.
United Projects for Aviation Services Company (UPAC) posted an 11 per cent increase in third quarter revenue compared with the same period in 2020, mainly due to higher revenue from airport-related services and parking following a gradual increase in traffic and the phased opening of operations and facilities at Kuwait International Airport.
"That said, UPAC revenue continues to be affected by pandemic-related travel restrictions that remain in place and constrain passenger traffic," Agility said.
UPAC continues to take measures to reduce the pandemic’s impact on its business. Amid a successful vaccination campaign in Kuwait, UPAC operations have begun to show steady signs of recovery, Agility said. UPAC expects gradual growth in aviation traffic in the third quarter of 2021 and into 2022.
"Looking to the future, we are investing in high-growth markets, industries and technologies," Mr Sultan said.