Kuwait’s Agility, one of the largest logistics companies in the Gulf, reported a rise in first quarter (Q1) earnings and revenue for the year 2019, but earnings growth fell below analysts’ expectations.
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Agility’s Q1 2019 net profit attributable to shareholders amounted to 20.28 million Kuwaiti dinars ($66.66 million), compared to 18.9 million dinars in Q1 2018, a 7.3 percent increase.
Earnings were in line with SICO Bank’s estimate of 20.7 million dinars, adjusting for the implementation of International Financial Reporting Standards 16 (IFRS 16), a new global accounting standard covering the treatment of leases.
Ayub Ansari, senior analyst at investment bank SICO, said that its introduction had led to the amount of earnings the company declared reducing by 0.55 million Kuwaiti dinars.
“Adjusting for the IFRS 16 impact, earnings are actually up by 10 percent YoY (year-on-year),” Ayub Ansari, senior analyst at SICO, told Zawya by email.
Starting January 2019, Agility implemented the IFRS 16 for the first time. The newly-implemented standard does not distinguish between operating and finance leases, meaning that all leased buildings and equipments are immediately recognised as an asset and future lease payments as a liability on company balance sheets.
Agility said in its earnings call for 2018, that if IFRS 16 had been implemented for the whole of 2018, total assets would have increased by approximately 5 percent, total liabilities by 12 percent and net income would have dropped by 2 percent.
Agility’s Q1 2019 total operating revenue amounted to 378.77 million dinars, compared to 371.81 million dinars in Q1 2018, translating into a 1.87 percent increase, below SICO’s estimate of 400 million dinars.
“Revenue growth was disappointing,” Ansari said, adding that this “could be due to lower than expected growth in ‘Logistics’ sector revenue”.
The company’s shares dropped 3.3 percent on Sunday to 762 dinars and were the worst performer on Kuwait’s premier market index, dragging the index to close 2.2 percent lower. Agility’s shares have gained 9.26 percent so far since the start of 2019.
(Reporting by Gerard Aoun; Editing by Michael Fahy)
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