Agility dealt fresh blow with Q1 financial report

Kuwait's Agility, the Gulf's biggest logistics provider by market value, posted a 52.5 per cent fall in first-quarter net profit.

According to released financials, in the three months to March 31 net profit was US$60.72 million, after a net profit of US$127 million in the same period a year earlier.

Currently, the company remains in talks with the U.S. Department of Justice to resolve a November indictment accusing it of overcharging the U.S. Army over 41 months on $8.5 billion in contracts to provide food to soldiers in Iraq, Kuwait and Jordan.

Agility had said it was in talks with the U.S. government to settle the fraud charges, but there was no guarantee that an agreement could be reached. The firm had been suspended from bidding on new contracts since November.

In a statement released by Agility, chairman Tarek Sultan discussed the ongoing proceedings, as well as outlook for the remainder of the fiscal year.

“Agility is likely to face declining profitability over the course of the next four quarters, as a result of major US government contracts winding down in Iraq, recovery from the global recession, and the financial impact of the legal dispute with the US government," he said.

“We are aware that 2010 is a pivotal year for Agility because of the US troop drawdown in Iraq and subsequent phasing-out of some of our large government contracts. This year is the final option year for US government contracts that have historically contributed 25%-35% of Agility’s annual revenue.”

Though Agility’s immediate future may not look so bright, Sultan remained confident that the company would eventually pull through,

“Although we are facing challenges, I see them as a catalyst for change. I believe that with a commitment to discipline, Agility will emerge stronger, more flexible, and more competitive.”

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