Aramex net profit rises four per cent, Q1 2019

Dubai-based logistics company, Aramex, has reported revenue growth of four per cent to 1.234 million AED (€300,693) compared with 1.190 million AED (€289,967) in Q1 2018.

Revenues would have reportedly grown by eight per cent excluding the impact from currency fluctuations, mainly in the Libyan Dinar, South African Rand and Australian Dollar; and the company’s strategic restructuring of its domestic operations in India.

Net Profit for the quarter rose by four per cent to reach 108 million AED (€26.3 million), compared to 103 million AED (€25 million) in Q1 2018. Net profit was negatively impacted by the amount of 10.6 million AED (€2.5 million) due to the implementation of IFRS16 and currency fluctuations. However, Aramex’s strategic restructuring of domestic operations in India delivered a positive contribution of 6.7 million AED (€1.6 million) to net income.

“We continue to benefit from the healthy growth in global e-commerce volumes; however, we have started witnessing pressure on International Express margins due to lower and more competitive pricing,” said Aramex CEO, Bashar Obeid.

“Our key priorities for this year are to continue to invest in upgrading our service level across all our core markets, while progressing aggressively in executing our digital transformation roadmap. This will help us boost operational efficiencies to cater for rapidly changing e-commerce business requirements, including faster shipping and delivery solutions at lower costs.

“Our Integrated Logistics and Supply Chain Management business had a great quarter, thanks to our efforts to mobilise assets and resources to capitalize on the increase in demand for those services, especially from regional retailers aiming to boost their online sales,” he said.

Iyad Kamal, Chief Operating Officer at Aramex, added: “In Q1 2019, we continued to improve operating efficiencies and accelerated our digital transformation efforts in order to enhance service levels, especially in the last-mile delivery. These initiatives will help us win in the long-term, as we will be able to handle more capacity more efficiently and at a lower cost.

“Another trend that positively impacted our business this quarter was the entrance of major Middle East retailers into the online sales space as part of an omni-channel approach, which is why we are investing in servicing this promising market. We also launched our new, partially automated fulfilment centre at Dubai Logistics City, which has improved our logistics and supply chain management solutions and offering.

“Our operating expenses have increased by eight per cent in Q1 2019 following the expansion of our infrastructure in key markets like Saudi Arabia. Today, we have more than 150 pick-up points across Saudi Arabia with aggressive plans to further expand our presence, in an effort to make it as convenient as possible for customers to pick up their packages and ship with Aramex,” he said.

Aramex's cross-border International Express business grew by seven per cent to 533 million AED (€129.8 million). This performance is mainly attributed to the continuous growth in cross-border e-commerce, which registered double-digit growth across most of Aramex’s markets, mainly Turkey, Asia and North America. Shipment volumes surged by 22 per cent in Q1 2019, yet lower margins prevailed.

The Domestic Express business dropped by three per cent to 257 million AED (€62.6 million) due in large part to the strategic restructuring in India and fluctuations in foreign currency, mainly in the South African Rand and Australian Dollar. Excluding those factors, the business would have grown by seven per cent. The e-commerce Domestic Express business performed very well in GCC markets, and registered double-digit growth especially in Saudi Arabia and the UAE.

Freight Forwarding growth stabilised at one per cent to 287 million AED (€69.9 million), with Oil & Gas segment experiencing strong double-digit growth.

The Integrated Logistics & Supply Chain Solutions business experienced strong growth of 23 per cent to 85 million AED (€20.7 million), owed in large part to Aramex’s efforts to service the major regional retailers’ strong appetite to tap into omni-channel sales model, which led to strong demand for warehousing, sorting, and last mile delivery solutions.

“We continue to maintain a positive outlook for the remainder of the year,” said Obeid.

“However, the fast-changing landscape means that we will have to grow market share by being more competitive with our pricing, more efficient with our offerings and excelling at the quality of our service. We will carry on investing in automation and other technologies as part of our digital transformation roadmap to improve our operations and enhance the overall customer experience.

“Despite lower margins, we remain confident about our Freight Forwarding business, driven by our internal restructuring efforts, the introduction of new dedicated teams and our aggressive push into new verticals. We are also optimistic about the opportunity to expand our logistics and supply chain solutions in the region,” he said.

Last month, Aramex opened an e-commerce facility in Dubai.

(Image: Aramex CEO, Bashar Obeid.)

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