The financial results reported were normalized to allow comparison with 2021 performance; hence they exclude the MyUs acquisition (announced in 2022 Q4) and other transactions cost-related to that.
Q4 2022 gross profit improved by 16% year-on-year, primarily driven by the Middle East/North Africa (MENAT) and the Arab States (GCC). On the contrary, China and Australia were the weak performers of Aramex’s business due to slower economic growth, lower consumer confidence, and the global inflationary environment.
In particular, Aramex’s financial performance was supported by growth in the freight forwarding business and group-wide performance enhancement initiatives.
Aramex’s FY 2022 Revenue was broadly in line with 2021, while Q4 2022 revenue decreased 5% Year-on-Year to AED 1.53bn. Revenue was also impacted by currency devaluation in some operating countries, primarily in Lebanon and Egypt.
Normalized Net Profit for the full year was up 9% year-on-year to AED 173m, largely due to the Company’s efforts to drive operational efficiencies underpinned by expansionary GCC economies, increase in industrial activities in the region and resilient consumer spending. Aramex ended the year with a strong cash balance of AED 768m, which was stable compared to last year.
The International Express full 2022 year revenue declined 16% year-on-year to AED 2.25bn, driven by the softening of volumes due to COVID-induced lockdowns in China. This was partially offset by significant customer wins from local and international brands and the robust growth of the Shop and Ship business, which benefitted from positive contributions from MyUS. Gross profit margin increased to 32% during the year, driven by linehaul cost improvement and cost efficiency efforts. The reported gross profit for Q4 2022 increased 5% year-on-year to AED 194m with a gross profit margin of 32%.
The Domestic Express full 2022 revenue declined 7% year-on-year to AED 1.5bn, driven by foreign exchange impact and lower volumes, particularly in Australia. As a result of efficiency enhancement initiatives, including digital optimization and doubling the Pick-Up and Drop-Off (PUDO) network, the FY 2022 gross profit margin increased to 25%, and Q4 2022 gross profit increased by 15% to AED 97.6m with a corresponding gross profit margin at 26%.
Aramex’s Freight-Forwarding business recorded a strong FY 2022 performance with a 27% increase in revenues to AED 1.68bn and a 51% year-on-year increase in gross profit to AED 232.7m due to the increased focus on freight capabilities and competencies. During the year, Aramex expanded its air and sea charters and increased its focus on core markets, including the United Arab Emirates (UAE) and Southwestern Asia (KSA).
The Logistics and Supply Chain Solutions full 2022 revenue increased by 2% year-on-year to AED 445.3m, while Q4 2022 revenue declined by 2% year-on-year to AED 111m.
“We remain confident in the economic prospects of our home markets in the GCC and MENAT, benefitting from good GDP projections, young populations and fantastic growth opportunities. We are looking forward to contributing to this growth by supporting trade across key lanes and delivering what matters most to our customers. 53% of our global revenue originates from these two regions. Accordingly, we are strengthening our sales teams with new hires in 2023.
Looking ahead, our 5-year business strategy provides us with a clear roadmap to grow our business and deliver long-term value for all our stakeholders. We have earmarked AED 2.4 billion in capital expenditure over the next five years to sustain our organic growth plans. We also have several M&A opportunities in the pipeline, as inorganic growth is a key component of our growth strategy. Our strong cash position will help us fund some of these acquisitions.
For our Freight-Forwarding product, we will further build our expertise and competencies. For our Logistics product, we are almost doubling our warehousing space by 2027 to accommodate the growth in our business.
Meanwhile, for our Domestic and International Express business, we will continue to focus on protecting our margins and boosting operational efficiencies while continuing to grow our key verticals across SMEs, e-commerce, retail and more,” said Othman Aljeda, Chief Executive Officer of Aramex.