Logistics

The Company

Established in 1979 under the name Public Warehousing Company, Agility is the largest logistics provider in the Middle East and one of the world’s largest integrated logistics providers serving businesses and governments. It employs more than 20,000 employees and has operations in 100 countries. Agility has been listed on the Kuwait Stock Exchange (KSE) since 1984, with a secondary listing on the Dubai Financial Market (DFM) since 2006. It is currently the 13thlargest company on the KSE in terms of market cap which stands at KD901.3m ($3.17bn). Agility’s operations are divided into the logistics and related services segments, including the Global Integrated Logistics (GIL) business and Infrastructure segment. The GIL serves over 60,500 customers globally and accounts for more than 80% of total revenues. Agility also provides logisticsrelated services in emerging markets.

Agility reported a 3% decline in total revenues for 2013 to reach KD1.38bn ($4.85bn), due primarily to a 4.6% decline in revenues from the GIL segment, which stood at KD1.13bn ($3.97bn), partly offset by a 5.9% revenue improvement from the infrastructure segment to record at KD257.1m ($903.99m). The fall in revenues in GIL came despite higher volumes due to the underlying challenges in the freight forwarding industry, with falling freight rates for both air and ocean business. In the Infrastructure segment, Agility Real Estate, the largest contributor to the segment, grew its revenues by 16% in 2013, followed by a 12.5% increase in revenues at Tristar, Agility’s subsidiary in the UAE. Other companies in the segment, namely, National Aviation Services and United Project for Aviation Services jointly achieved revenue growth of 14% in 2013.

Asia accounts for a lion’s share of total revenues at 34%, or KD467.7m ($1.64bn), of revenues for 2013, followed by Europe at 27.2%, or KD374.7m ($1.32bn). Agility’s operating profit margin improved by 100 bps to 3.8% in 2013. Operating profitability had bottomed during 2011 at 1.4% after a contract loss in 2010. Agility undertook major restructuring initiatives in response that resulted in improved profitability during 2012 and 2013. The efforts resulted in higher net profit margins of 2.4% and 3.4% during 2012 and 2013, respectively. The reported EBITDA margin improved to 6.8% in 2013 from 5.6% in 2012 primarily due to higher EBITDA reported by the infrastructure segment (30.7% in 2013 vs. 23.2% in 2012). The EBITDA margin for the logistics segment remained unchanged at 2.1% in 2013. Impairment losses declined from KD20.1m ($70.67m) in 2012 to KD2.8m ($9.85m) in 2013. Both return on average assets and return on average equity improved in 2013 to reach 3.3% and 5.3%, respectively.

Agility has a strong asset base, which stood at KD1.4bn ($4.92bn) as of December 31, 2013. Total investments account for around 10% of the total assets that reached KD151.8m ($533.74m) in 2013, which primarily includes the investment in Korek Telecom, an Iraqi mobile operator in the Kurdistan region, made in 2011. Agility had originally acquired a minority interest in the telecoms operator in 2007 through a convertible debt. In 2011, Agility increased its indirect stake in the operator to 23.7% by acquiring a 44% stake through its partnership with France Telecom. As per the agreement, from 2014 France Telecom-Orange will have the opportunity to exercise an option to increase its stake in the operator by acquiring Agility’s existing stake. Agility’s capital structure has improved during the past five years as the company continued to lower its leverage.

Development Strategy

Agility won several projects and contracts during 2013, including a two-year contract with SSAB in Sweden, a warehousing contract in Egypt worth an estimated KD2.8m ($9.7m), and a five-year contract with Kuwait National Petroleum Co. (KNPC) worth an estimated KD7.1m ($24.96m). Agility thus plans to grow business through diversification of its revenue base, with an ongoing focus on global accounts and field sales by strengthening its sales channel strategy. Agility will also look at opportunistic acquisitions of high-performing, cash flow-positive businesses in emerging markets to realise immediate financial value.