Makhazen (MKHZN) Earnings Call Transcript & Summary

Hello, and welcome to the Agility Public Warehousing Full Year 2024 Earnings Webcast. My name is Nadia, and I'll be coordinating your call today. [Operator Instructions] Please note, there will be no audio questions today. I will now hand over to your host, Adel from Arqaam Capital to begin. Aly, please go ahead.

Thank you, Nadia. Good afternoon, ladies and gentlemen, and thank you for joining us today. This is Aly Adel, and on behalf of Arqaam Capital, I would like to welcome you all to Agility Public Warehousing Full Year 2024 Earnings Call. With us today from Agility, Khadija, the CFO; and Soriana, the IR Manager. Without any further delay, I will now turn over the call to the management team. Please go ahead.

Thank you, Aly, and welcome, everyone, to Agility's Full Year 2024 Earnings Webcast. Today, we will be presenting to you Agility's financial and operational performance during the year 2024. And Khadija will be also addressing your questions towards the end of the session. So if you have any questions, please write it in the chat box, and we will answer it towards the end of the session. And before I hand over to Khadija, I would like to draw your attention to the disclaimer available on the second page of this presentation. If you can take a moment to read, and then I'll hand it over to Khadija to start the presentation. Thank you.

Thank you, [ Soriana ], Nadia and Aly. Good afternoon, everyone, and thank you for joining us today for Agility KSCP Full Year 2024 Results Presentation. My name is Khadija Obla, and I'm the CFO of Agility KSCP. In today's call, we'll walk you through the group's financial performance and highlight some of the key developments in 2024 to help provide context around the numbers that we've published. After the presentation, we'll be open to take your questions. So 2024 was a year of steady execution and meaningful structural changes for Agility KSCP, most notably the listing of Agility Global in Dubai Stock Exchange. This milestone has reshaped how our results are reflected in our financials, particularly in terms of minority interest and net profit attribution. That said, the fundamentals of the business remains strong, and the group's core operation continued to perform well. Agility KSCP delivered solid results with full year revenue up 13% and EBIT growing at 6%, supported by the strong performance of Agility Global, which reported 21.4% EBIT increase driven by strong performances across its operating entities. The Board is recommending a 10% cash dividend for 2024, equivalent to KWD 0.10 per share, subject to the approval of the upcoming general assembly. This reflects our confidence in the company's underlying fundamentals and our continued commitment to improving and enhancing shareholders' value. With that, let's turn to the numbers. Starting with revenue, the group reported KWD [ 1.53 ] billion, reflecting a 13% increase year-over-year between '23 and '24. This performance was primarily driven by Agility Global, which recorded $4.5 billion in revenue, a 14.5% increase over 2023. The net revenue of Agility KSCP reached KWD 975 million, up 19% year-over-year. This outpaced top line growth. In terms of EBITDA, it grew by 8% to KWD 277 million primarily driven by Agility Global. And while the growth rate was more moderate compared to the revenue due to certain one-off items, it is nonetheless reflects solid underlying performance across the group. The net attributable profit to equity holders was KWD 63 million compared to KWD 84 million in 2023, now it does appear like a 25% decline. But as noted previously, this is largely due to the reallocation of earnings to noncontrolling interest. So total consolidated net profit remains healthy, and the group's underlying businesses, particularly within Agility Global continues to deliver solid results. Now moving to the balance sheet. And as of December 31, 2024, Agility KSCP consolidated assets reached KWD 4.2 billion, a 12% increase year-over-year. Current assets rose 30%, primarily driven by Agility's Global expansion, which resulted in higher inventory levels and an increased cash balance. Noncurrent assets grew by 8%, supported by continued investments in core operations and valuation gains, including the appreciation of DSV shares, share price, which is held within the Agility Global investment portfolio. In terms of liabilities, we recorded a 16% year-on-year increase, evenly split between current and noncurrent liabilities. This growth is largely attributable to the expansion of Agility Global's operating entities, which continue to scale through organic growth as well as acquisition initiatives. With that, we continue to manage our debt prudently with adequate liquidity and healthy balance sheet structure. The most significant shift you would see in this slide is visible under minority interest, which rose from KWD 124 million in 2023 to KWD 1.27 billion in 2024. This change is driven by the rising contribution of Agility Global. Correspondingly, if you look at the equity attributable to the parent company, it has decreased by 43% to almost KWD 1 billion, which reflects this reallocation. So a portion of shareholders' value transitioned from being reflected on the KSCP level and the balance sheet to being held directly by the shareholders through their ownership in Agility Global. Now, let's turn to the cash flow and capital deployment of the year, starting with cash flow profit -- operating profit before changes in working capital, Agility generated KWD 249 million, that's an increase of 8% versus 2023. And this growth is consistent with our EBITDA performance. In terms of working capital changes, we saw KWD 14 million positive impact, up slightly versus last year, which was at -- stood at KWD 13 million, which reflects a stable working capital management. So accounting for some other items or nonoperating cash flow, including taxes, the total cash from operating activities stood at KWD 238 million, a 7% increase versus last year. In terms of the investment activities, we have an outflow of KWD 72 million compared to KWD 109 million in 2023. So here, it does show a 33% reduction. However, it's important to note that this figure represents a net amount combining both cash outflows and inflows. So the reduction doesn't necessarily indicate a slowdown in investment activity, but it is due to certain inflows during the year, including the sale of subsidiary, and higher dividends received and positive movement in certain investments. As such, it represents rather a more balanced mix of cash uses and recoveries during the year rather than a reduction. So that takes us to a free cash flow of KWD 165 million, 47% above last year, reflecting strong operational performance, a measured approach to capital expenditure as well as supporting the proposed and agreed KWD 0.10 dividend per share. And if we take a look at the bar charts on the right, you will see the breakdown of the total investment activities in terms of net CapEx and investments. It does show for 2024, that 72% was directed through -- towards operational CapEx and 28% was allocated to financial investments. But again, although the chart may suggest that there is a shift in composition between 2023 and 2024, it's also important to note here that these figures are net amounts. And as I explained earlier, the change is influenced by offsetting inflow such as asset disposal rather than a fundamental shift in the way we allocate priorities. Overall, the investment mix actually remains broadly consistent with the previous years. So these are the slides -- that summary of the slides of the financial statements that were published. And to conclude, Agility KSCP delivered a solid performance in 2023. 13% revenue growth, 6% increase in EBIT, 8% increase in EBITDA, supported by continued momentum throughout the group, particularly within the Agility Global level. And we did strengthen our balance sheet with total assets rising 12%, strong liquidity position maintained, free cash flow improved by 47% and our capital deployment remained disciplined. The Board recommendation of KWD 0.10 per share cash dividend reflects the confidence in the group's performance and strategic direction. Thank you for continued interest and support, and we now welcome your questions.

[Operator Instructions] Please note, there will be no audio questions today. [Operator Instructions] It appears we have no questions at this time. This now concludes today's call. Thank you all for joining. You may now disconnect your lines. My apologies, we've just had 2 questions come through. I'll hand over to you, Khadija.

Yes. Just a moment, while I read the questions, please. There is a question, what are the revenues and expenses associated with the disputed properties of PAI in 2024? So I think this was explained multiple times. So this is a matter that's currently before the court. And as such, we're limited in what we can comment at this stage. I would, however, point you to the financial statement when there is a comprehensive note. I think it's Note 28. And it details the status of each case. Okay. There is a question around -- okay, next question. Your thoughts on the global trade war tariffs and will this impact Agility going forward? I think this question is linked to Agility Global. Agility Global is a stand-alone entity, and we do consolidate the numbers. It has its own Management Board, there is an analyst call next week, I think on the April 7. So I recommend that you pose this question during that call.

[Operator Instructions] Thank you. We have no further questions. This now concludes today's call. Thank you for joining. You may now disconnect your lines.