A perceived lack of transparency continues to haunt Agility, the Kuwaiti logistics firm, as investors struggle to understand where the company stands in its lawsuit with the US government.
The company's stock lost almost 8 per cent in the first trading days of the year, touching a 15-week low, before rebounding this week. Agility closed up 2 per cent yesterday at 495 Kuwaiti fils. The company was reported to be facing a new indictment in the US federal courts over allegations of overcharging for food supplies to the US army. The latest court action follows a criminal case filed in November 2009, when Agility was accused of overcharging the American military over 41 months on US$8.5 billion of contracts first signed at the start of the 2003 invasion of Iraq. Agility was subsequently replaced as the main regional supplier to the US army and was banned from bidding for new contracts while the court case was pending.
But in a statement on the Kuwaiti bourse, Agility said the report about a new civil case against the firm was not true. The matter was a "procedural amendment" to the original case, the company said.
It is also not clear whether Agility would be affected by a new US tax on contracts with foreign suppliers. The law was passed last month but analysts remain unclear how it will be applied. Agility's outlook continues to cause concern among analysts.
"We have been advising caution on the company ever since the announcement in November 2009," said Kareem Murad, a logistics analyst at Shuaa Capital. "We mentioned multiple scenarios of how this indictment would end, most of which will have a negative impact on the company's profitability," he said. The contract with the US army accounted for 40 per cent of Agility's revenue and Mr Murad said the considerable legal costs would also cut into the company's bottom line.
Agility reported a net profit of 13.89 million Kuwaiti dinars for the third quarter of last year, a 65.7 per cent drop on the year-earlier period.