Resilient GCC economies underpin Aramex’s revenue growth

Dubai-based transport and logistics company, Aramex, has announced its financial results for Q3 and the nine months ended 30 September 2022. It has also completed its largest acquisition to date.

Revenue for the first nine months of 2022 reached 4.39 billion AED (approx. €1.2 billion) which was relatively unchanged from 4.46 billion AED in 9M 2021.

Solid performance in Freight Forwarding was offset by the softness in the Courier offering, which is attributed to lower volumes in Oceania and North Asia. Revenue was also impacted by the devaluation of currencies in certain markets.

GP margin for the Group was 22.5 per cent in Q3 2022 and 23.8 per cent for the nine-month period. The Courier GP margin was stable at 30 per cent in Q3 2022, and Aramex noted that the Shop & Ship product delivered the highest GP margin since Q1 2021. Freight Forwarding delivered a 2.0-point improvement in GP margin to 14 per cent in the first nine months of the year 2022, while Logistics was impacted by one-offs associated with the restructuring in this product which is expected to be completed by end of 2022, as the company remains focused on quality revenue customers only.

Despite inflationary pressures, 9M 2022 EBITDA margin was solid at 10.6 per cent, driven by the company’s cost optimisation initiatives.

Aramex’s disciplined approach to cost management lowered Operating Expenses (OPEX) during the reporting period, while maintaining investments to scale operations.

In Q3 2022, net profit from continuing operations increased 18 per cent year-on-year to 37 million AED (approx. €9.7 million). Net profit from discontinued operations includes profits incurred in Q3 2021 from InfoFort sale last year.

Year to date, the company reports to have sustained a very healthy liquidity profile with consistent positive free cash flow, a cash balance of 635 million AED (approx. €166.4 million), and a debt-to-EBITDA ratio of 0.8x, excluding IFRS 16.

Aramex’s strong balance sheet is expected to support the company’s growth strategy including investments in digital and technological infrastructure as well as its active M&A pipeline.

“The strength and resilience of the Gulf Cooperation Council (GCC) economies contributed to the stability of our top line year to date in 2022,” said Aramex CEO, Othman Aljeda.

“In line with our strategic objectives, our revenue mix is now more diversified both in terms of contributions from the different business segments and from a more diverse customer base.

“Our diversified customer base has further reduced concentration risk, with our top customer currently contributing 7.0 per cent of the group’s total revenue.

“The Courier business remained resilient with a stable GP margin of 30 per cent, supported by initiatives to improve operational efficiencies and the successful rollout of same-day deliveries and other premium services in the GCC. The Freight-Forwarding business continues to be our strong performer, registering double-digit growth in both the three-month and nine-month periods.

“We remain cognisant of global macro activity, and believe that our dominant position in the GCC, a region which is enjoying economic expansion and relatively optimistic consumer sentiment, will continue to support our resilient performance.

“Q4 2022 marks the first quarter that we are consolidating MyUS, a global technology-driven platform that enables cross-border e-commerce, into Aramex operations, and we look forward to unlocking further value over the long term through revenue and cost synergies.”

Last month, Aramex completed its acquisition of cross-border e-commerce enabler platform, MyUS, for an all-cash purchase price of approx. $265 million USD.

As a result of this acquisition, MyUS will be fully integrated into Aramex’s business, operating as a business unit within the company’s Courier business segment. MyUS will retain its brand name and will be complementary to Shop & Ship, Aramex’s subscription-based last mile e-commerce solutions platform.

The acquisition will further strengthen Aramex’s cross-border express business by increasing shipment volumes, growing and diversifying its customer base, and expanding coverage in new origins and destinations. This transaction is also expected to be immediately value accretive for Aramex, providing strong growth in revenues, attractive profitability and superior cash conversion.

MyUS is a leading, US-headquartered, technology-driven and cross-border e-Commerce enabling platform, providing cost-effective package forwarding solutions. In 2021, the company generated more than $100 million USD in revenue and delivered 1.1 million packages to customers who shop from retailers based in the US, UK and China. The company has about 180 thousand active customers. Over its 25-year history, MyUS has mastered a customer-centric business model that addresses the needs of e-commerce shoppers worldwide, underpinned by cutting-edge proprietary software, scalable technology, and industry-leading expertise. The company has 300 employees, with the majority based in the US.

In other news, Aramex Oceania has actioned a succession plan.

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