Kuwait's Agility posts lower profit in challenging economic environment

The acquisitions of John Menzies and HG Storage International helped the company to remain 'strong' in 2022

Agility's net revenue for 2022 rose more than 83 per cent to 473.3 million dinars, from 251.4 million dinars a year earlier. AFP

Kuwait's Agility, one of the biggest logistics companies in the Middle East and North Africa, has reported a 93 per cent drop in annual profit in a challenging economic environment.

Net profit to the 12 months ended December fell to 68 million Kuwaiti dinars ($221.6 million) from 977.4 million dinars in 2021, the company said on Saturday.

Net revenue for the period rose more than 83 per cent to 473.3 million dinars, from 251.4 million dinars a year earlier.

Net profit from continuing operations was up more than 180 per cent to 68 million dinars, from 24.2 million dinars in 2021, while discontinued operations contributed 953.2 million dinars.

Earnings before interest, taxes, depreciation and amortisation rose 65.7 per cent to 180.5 million dinars, from 109 million dinars in the previous year.

The company's earnings per share surged nearly 180 per cent annually to 26.83 fils, from 9.6 fils.

Agility had a “strong” 2022, marked by two major acquisitions — UK-based aviation companies John Menzies and HG Storage International — which are “reshaping the company and creating new opportunities”, Tarek Sultan, vice chairman of Agility, said in the statement.

“But like all businesses, we face global economic uncertainty in 2023, as well as uncertainty regarding government land lease policy in Kuwait,” he said.

Shares of Sulaibiya-based Agility were up 1.47 per cent, or 62 fils, at the close of trading on Thursday on the Kuwait Stock Exchange.

Agility acquired John Menzies for £763 million ($921.5 million) in August, merging its subsidiary National Aviation Services (NAS) with the British company to create the world's biggest aviation services provider.

In March last year, Agility acquired a 51 per cent stake in HG Storage International for 65 million dinars in a deal aimed at expanding its global portfolio. HG International, a joint venture between HNA Group and Glencore Group, was acquired by Agility's UAE subsidiary Tristar.

“Agility’s acquisition of Menzies and Tristar’s acquisition of HG Storage helped us accelerate growth, expand our geographic reach and increase our exposure to sectors that have strong future growth potential,” Mr Sultan said.

The aviation industry's growth was affected by the coronavirus-induced slowdown but has since recovered as restrictions and flight bans caused by the health crisis ended.

The value of the global airport services market is projected to nearly triple to more than $290.2 billion by 2029, from an estimated $98 billion in 2022, at a compound annual rate of about 17 per cent, latest data from Fortune Business Insights said.

Agility's aviation services unit reported revenue of 294 million dinars, which includes the full-year performance of NAS and five months of Menzies’ results, and Ebitda of 41.5 million dinars in 2022.

It’s important to emphasise that we take a long-term view in value creation ... we look beyond daily share price movements to the strategic value, growth and returns we believe our investments will deliver for our shareholder over the long-term

Tarek Sultan,
vice chairman of Agility

Growth in the company's ground handling operations was fuelled by the revival of air travel, but was slightly offset by a reduction in revenue from Covid-related services provided mainly in Kuwait, it said.

Full-year revenue at Tristar rose more than 60 per cent annually to 252.9 million dinars, while Ebitda climbed 39 per cent to 53.1 million dinars, with the maritime and fuel farms units delivering the highest growth.

Aside from the HG Storage acquisition, Tristar was driven by the renewal of two large long-term peacekeeping contracts, making Tristar the United Nations' leading supplier, and the growing maritime business.

“It’s important to emphasise that we take a long-term view in value creation,” Mr Sultan said.

“On the investments side, stock market volatility affected our holdings, but we look beyond daily share price movements to the strategic value, growth and returns we believe our investments will deliver for our shareholder over the long-term.”