Kuwait : Net profit at Agility more than halved in the first quarter and the Gulf's biggest logistics provider said future earnings would suffer from legal costs and lost contracts following fraud charges.
The firm, formerly Public Warehousing Co K.S.C. (PWC), has been accused of overcharging the US Army over 41 months under contracts to supply $8.5 billion (Dh31.2 billion) of food to troops in Iraq, Kuwait and Jordan.
If convicted, prosecutors say the company faces a fine of twice the gains it realised or twice the loss to the United States.
Agility says it is in talks with the US government to settle the fraud charges, but there is no guarantee an agreement can reached. The firm was suspended from bidding on new contracts last November.
Last month, Agility said it had been replaced as the main supplier to the US military in Kuwait and Iraq.
"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," the firm said yesterday.
Final option year
Agility added that 2010 will be the final option year for US government contracts, which have contributed up to 35 per cent to the firm's annual revenues.
"A big part of the group's business comes from its contracts with the US government and a long suspension could have a critical effect on the groups business with the government," Agility's auditors said in the bourse statement.
The firm's assets came in at 846 million dinars at the end of the first quarter, with shareholders equity at 971.4 million dinars.
Net profit in the three months to March 31 was 17.59 million dinars ($60.72 million), compared with 37 million in the same period a year earlier, Agility said.
