Agility eyes China, India as U.S. government contract revenue slips
Kuwait-based logistics major Agility is apparently mulling acquisitions in China and has set aside $1 billion to tackle the India market “as it seeks to cut dependence on U.S. government contracts,” according to a report Sunday by the AHN news service.
“We’re very bullish on China because it’s critical to our customers to have a strong China presence,' said Managing Director Tarek Sultan al-Essa in an interview with Bloomberg at the World Economic Forum in Davos, Switzerland. “In India, we feel there’s a big opportunity for companies that commit to develop infrastructure.'
Agility, part of a group that won a $50 billion contract to provide cargo shipping, storage and fuel distribution services to the U.S. Army, saw sales fall to 30 percent of revenue last year from 40 percent in 2006 as U.S. withdrew troops from Iraq, al-Essa said. The U.S. plans to withdraw about 30,000 troops from Iraq by July.
“Acquisitions this year will help boost Agility’s annual sales in China to $1 billion in two years from about $300 million now,” al-Essa said. “The company operates in 36 Chinese cities and wants to expand geographically, he said, without specifying the names or size of any possible targets.”
Meanwhile, in India, the company has spent $200 million on land and now plans to spend $800 million building warehouses, transportation networks and agricultural logistics facilities upon it.
According to the AHN report, Agility’s sales rose to about $6 billion in 2007 from $5 billion a year earlier and emerging-markets expansion will help boost sales to more than $7 billion in 2008.
