News / Improved airfreight yields give Agility GIL first-half results a lift

High airfreight yields helped Agility’s Global Integrated Logistics (GIL) business maintain first-half profit and revenue on par with 2019.

However, the Kuwait-based 3PL group also includes logistics parks, customs, liquid logistics and aviation services, which together saw net profit plunge 61% in the first half to KWD16.2m (US$52.9m).

But GIL, which includes air and ocean forwarding and contract logistics, recorded a 1.3% year-on-year ebitda increase to KWD28.8m.

“This was driven by strong contract logistics, project logistics, and air freight results, as well as a sharp focus on containing costs,” Agility said.

GIL’s net revenue was flat at KWD135.8m, increasing in contract and project logistics, and airfreight, but falling in ocean and event logistics.

Tarek Sultan, vice chairman and CEO, said the economic fallout from the Covid-19 pandemic had an uneven effect on Agility’s businesses.

“Our contract logistics business and logistics parks have weathered this reasonably well, because demand for storage space has been steady or increased, especially as customers have looked to add to safety stock or support pandemic-driven increases in e-commerce sales,” he explained.

Ocean and air freight volumes were down 14.8% and 23.6%, respectively, which Agility put down to the impact on demand from lockdowns, production stoppages and economic contraction across industries and geographies.

“However, H1 saw higher yields in airfreight, due to capacity shortages and a spike in demand for urgent shipments of PPE and other medical equipment,” the company added.

As a result, airfreight net revenue increased 17% year on year, while ocean freight net revenue decreased 16%. Contract logistics achieved 7% net revenue growth, mainly via operations in Kuwait and Saudi Arabia, while project logistics was a star performer, with a 25% net revenue increase, driven by new capital projects and “positive volumes” from existing customers, Agility noted.

Mr Sultan added: “The full impact of Covid-19 is not yet clear – there are many possible scenarios and unknowns – but we are taking steps to weather the storm and emerge stronger.

“Ultimately, we feel that our long-term vision of infrastructure growth in emerging markets, our growing focus on disruptive technologies and digital enablement for logistics and expansion into new market segments, like e-commerce, is more important than ever.”

However, cost-cutting is also high on the agenda, with Mr Sultan noting the company is “adjusting to the reality on the ground within each respective business, and bringing the cost structure in line with the new levels of business we are seeing.”

In April, The Loadstar Premium reported GIL was “shrinking to get fitter” in the Asia Pacific region, following a management reshuffle in China, and also the loss of the company’s long-standing CEO in February.