Agility first-half profits up, but feels pressure from lawsuit, rates

Kuwait-based Agility Logistics posted positive results during the first half of the year, as strength in the aviation services and industrial real estate sectors boosted profits. However, the logistics provider also felt pressure from higher airfreight rates and a US$95 million civil lawsuit settlement.

Air and ocean revenue in Agility’s Global Integrated Logistics group rose, with a 14.7 percent increase in airfreight volume during the second quarter, compared to the previous Q2. Still, Agility reported that overall net revenue flattened during the quarter, hindered by “significant yield degradation in freight forwarding,” with capacity constraints and higher freight rates.

In Agility’s Infrastructure group, ocean- and airfreight, along with Agility’s industrial real estate sector, drove most of the group’s growth. Agility’s National Aviation Services’ revenue rose by 17 percent, year-over-year, with expansions in Africa – particularly in Cote d’Ivoire – and Afghanistan.

Net profit during the first half was higher, y-o-y, rising 11.6 percent to $104 million. First-half adjusted earnings before income, taxes, depreciation and amortization (EBITDA) also rose 15.4 percent y-o-y to $210 million, but were challenged by ongoing legal fees and expenses related to $95 million that Agility agreed to pay to settle a civil lawsuit accusing the company of defrauding the United States military on food-supply contracts.

Agility still expects to meet its EBITDA target of $800 million by 2020, with continued earnings growth from operations and reduced legal fees following the settlement of the civil lawsuit. “We expect the global market to continue to increase, and we aim to grow above the market,” Agility senior vice president of air freight management Michael Blaufuss told Air Cargo World. “For Q3 we expect 4 to 5 percent market growth, year-over-year, and for Q4 we expect 2 to 3 percent.”

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