Aramex revenues remained stable in Q1 2023, falling by 1% y-o-y to AED 1,431m. Gross profit increased by 4% y-o-y to AED 358m.
However, net profit decreased by 49% to AED 24m. The UAE based International express and freight forwarding company put the large drops in net profit down to a number of factors including normalisation of global shipping flows and inflationary pressures. The global rebalancing of shipping volumes was shown starkly in its drop in air freight volumes (12%) and full container load container throughput (FCL TEU) that fell by 14%.
CEO Othman Aljeda said, “Three of our four business lines increased gross profit year-on-year, and we maintained a stable profit margin in our Domestic Express business, due to our relentless focus on cost control and improvements in productivity.”
Among the four segments of the business, International Express benefitted from the acquisition of myUS in the last financial year, though the acquisition was a major factor in the sharp drop in net profits for the quarter across the business. International Express’s parcel forwarding business margins helped revenues, though what Aramex referred to as ‘a change in customer mix’ offset this somewhat. It still managed a 1% increase in volumes y-o-y to 5.4m shipments in the quarter.
The Domestic Express segment saw strong growth in its business in the GCC, though there was a decline in revenues in Australia and New Zealand. Overall volumes across the segment fell 2% y-o-y to 24.6m shipments in the quarter, and revenue fell by 4% y-o-y to AED 362m. In addition, exchange rates in Egypt, Lebanon and South Africa also impacted revenues. Aramex is installing a pick-up/drop off parcel network in the GCC and announced that this has doubled in size in the quarter.
Aramex’s Freight-Forwarding saw revenue decrease slightly by 1% y-o-y to AED 385m, whilst gross profit increased to AED 61m.This was driven by the positive impact of operational efficiencies, including increased focus on realizing quality revenue and consolidation of trucking resources between freight and logistics products. Revenue growth in Africa and America, stable revenues in the GCC and MENAT, and newly opened freight services in Oceania contributed to the revenue growth in the Freight-Forwarding business.
For the Logistics and Supply Chain Solutions business, Aramex saw a 5% y-o-y drop in revenue, while gross profit increased by 23% to AED 16.2m. Solid performance in the GCC, Europe and South Africa, driven by sectors such as Retail, e-Commerce, Pharma and Oil & Gas, contributed to this growth.
Where more Europe and US focused logistics and delivery companies will be more exposed to the macroeconomic headwinds, GCC based Aramex may be less so thanks to its home location and base. In particular due to the projected growth of GCC economies, Aljeda is optimistic for the year ahead: “The continued growth in the GCC economies, and the expectation that inflationary pressures around the world may peak and then decline significantly show some signs of optimism towards the end of the year.” At the same time, to counteract currency fluctuations, the logistics company is looking to “to hedge exposures and move into more US Dollar-denominated contracts.”
Source: Aramex
Author: Richard Shrubb
