Agility growth hit by record oil prices

OVERCOMING CHALLENGES: Agility expects to increase revenues by $1 billion this year, despite rising fuel costs. (Getty Images)

Agility, the Middle East’s biggest logistics provider, could see international expansion stunted by the soaring price of oil, its chairman and managing director told magazine Arabian Business on Monday.

Speaking on the sidelines of the World Economic Forum (WEF) in Sharm El Sheikh, Egypt, Tarek Sultan revealed oil prices have had a "dampening effect" on growth.

"From an international perspective, because we are a global company, the rise in the price of oil has had a dampening effect on growth and could impact the speed of our growth in the global market,” Sultan said.

The price of oil has soared past $100 a barrel since the turn of the year and on Tuesday past $127, driven by renewed fears of supply disruption and Opec's reluctance to raise output.

International expansion is a key part of Agility's growth strategy as it looks to lower exposure from US military deals in Iraq by making acquisitions and expanding to emerging markets.

Sultan also said the company expects to record revenue growth of up to $1 billion in 2008, but was unable to give guidance on profits at this stage.

“...we’re looking at being close to $7 billion in revenue by the end of the year, up from approximately $6 billion last year,” he said.

Sultan said Agility expected to present a three-year financial roadmap “within the next couple of months”.

Agility on Saturday posted a 10% drop in first-quarter profit to 37.5 million Kuwaiti dinars ($140.6 million) from 41.7 million dinars in the same period last year.

The drop was Agility's second consecutive double-digit fall in earnings. The company posted a 10.5% fall in fourth-quarter profit year-on-year to 34.9 million dinars. Full-year profit for 2007 was 153.9 million dinars.

Agility plans to increase its share capital by 25% selling shares for 450 fils each to existing investors, it said last month. It paid a cash dividend of 80 fils each and a 10% bonus share issue for 2007.

Agility, formerly PWC Logistics, is a global provider of end-to-end supply chain solutions, with more than 32,000 employees in 550 offices located in over one hundred countries around the world.

Throughout the Middle East, Agility operates a network of warehousing facilities and a fleet of over 3,000 transportation and distribution vehicles.

In the Far East, subsidiary Trans-Link Group offers specialized logistics services, including exhibition and event logistics, e-fulfilment and project forwarding.

Globally, the company's Transoceanic Shipping provides project logistics solutions tailored to the construction, mining, and oil and gas industries. Its GeoLogistics Corporation also offers global freight management.

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