UPDATE 1-Agility Q4 profit up, talks ongoing with US

* Q4 net profit up 22 percent

* No guarantee on settlement in fraud charges with US

* Co to reduce costs, maximise yields

(Adds details, background)

By Eman Goma and Diana Elias

KUWAIT, April 11 (Reuters) - Kuwait's Agility (AGLT.KW), the Gulf's biggest logistics firm, posted a 22 percent rise in fourth-quarter profit, and said it could not guarantee to reach a settlement with U.S. government on fraud charges.

Agility, formerly Public Warehousing Co K.S.C. (PWC), is in talks to resolve an indictment accusing it of overcharging the U.S. Army on supply contracts in Iraq, Kuwait and Jordan.

Agility, the principle food supplier to the U.S. military in Kuwait and Iraq, posted a 22 percent rise in fourth-quarter net profit, it said in a statement on Sunday.

Net income in the three months to Dec 31 came in at 40.9 million dinars ($141.7 million), up from 33.6 million dinars in the year-earlier period, Agility said.

Analysts surveyed by Reuters had expected Agility's fourth-quarter net profit to range between 29 million and 41 million dinars. [ID:nLDE60A0ZF]

The firm's full-year net profit came in at 156.4 million dinars, or 40.6 fils earnings per share, compared with 141 million dinars, or 33.6 fils earnings per share in 2008, Agility said. There are 1,000 fils to the dinar.

Agility's board recommended a cash dividend of 40 fils per share for 2009. The recommendation needs the approval of the firm's shareholders.

"Due to the inherent uncertainty surrounding the US Department of Justice lawsuit against the group, no provision is considered in the accompanying consolidated numbers," the company said.

The firm's net debt stood at 39 million dinars at the end of December 2009, the statement said.

NO SETTLEMENT GUARANTEE

Agility said that discussions with the U.S. government to settle fraud charges were still ongoing, but "there is no guarantee that the parties can reach a mutually agreeable settlement". The firm was indicted by a U.S. grand jury in Atlanta in November for overcharging the U.S. Army over 41 months on $8.5 billion in contracts to provide food to soldiers in Iraq, Kuwait and Jordan.

Prosecutors have said that, if convicted of violations under the False Claims Act, the company faces probation and a fine of up to twice the gain it realized or twice the loss to the United States.

"Agility is facing a number of challenges, including the slower-than-expected recovery from the global economic recession, the troop drawdown in Iraq, and the ongoing legal issues," the firm's Chairman Tarek Sultan said in the statement.

He added, "our path forward will be focused on improving our return on capital and managing the balance sheet... by growing revenue organically, reducing our costs prudently, and maximizing yields on core operating assets," he said.

Trading in Agility's shares on the Kuwaiti bourse has been halted since April 1, as it delayed the release of its 2009 financial results pending clarity on its negotiations with U.S. authorities over fraud charges.

Agility's shares are expected to begin trading on Monday. (Editing by Dinesh Nair, Mike Nesbit) ($1=.2887 Kuwaiti Dinar)