Aramex revenues grow 2pc in Q3
Aramex has reported revenues of Dh1.270 billion ($345.77 million) for the third quarter ended September 30, a growth of 2 per cent, compared to Dh1.239 billion ($337.33 million) during the same period last year.
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Aramex, a leading global provider of comprehensive logistics and transportation solutions, has reported revenues of Dh1.270 billion ($345.77 million) for the third quarter ended September 30, a growth of 2 per cent, compared to Dh1.239 billion ($337.33 million) during the same period last year.
Revenues would have grown by 5 per cent excluding the company’s strategic restructuring of its operations in India and currency fluctuations, said a statement from the company.
Despite the 13 per cent growth of international express volumes over the quarter, revenue growth was lower than expected due to tighter yields on e-commerce business as a result of pricing pressure, it stated.
Revenues for the nine-month period ending September 30 increased by 3 per cent to Dh3.782 billion ($1.029 billion), compared to Dh3.661 billion ($996.76 million) in the corresponding period of 2018.
Net profit registered a 1 per cent increase in Q3 2019 to Dh113.8 million ($30.98 million), compared to Dh112.9 million ($30.74 million) in Q3 2018, due to tighter yields and pricing pressure from the cross-border e-commerce business, as well as the implementation of IFRS16.
Excluding IFRS16 impact, net profit would have grown by 7 per cent over the quarter. Net profit for the nine-month period ending September 30 2019, increased by 2 per cent to Dh344.9 million ($93.90 million) compared to Dh338.6 million ($92.19 million) in the prior year period.
Excluding an IFRS16 impact of Dh21.3 million ($5.80 million), Aramex’s net profit would have grown by 8 per cent over the nine-month period.
Bashar Obeid, chief executive officer of Aramex, said: “We are pleased to see strong growth in our company’s e-commerce volumes despite pricing pressure witnessed across the e-commerce industry.”
“As we expect the low-margin environment to continue over the next quarter, we will remain focused on improving service levels on the ground to prioritize quality across the delivery journey; and optimising costs throughout the business to build further resilience,” he said.
Obeid continued: “We believe that business transformation and cost optimisation are becoming necessary than ever to compensate for the continued investments in upgrading our last mile delivery operations, as well as the pricing pressure on e-commerce business.”
“We remain confident in the strategic direction we have taken to maintain and support the growth of our e-commerce business across the region. This opportunity is supported by the promising growth of our B2B service lines as a result of efforts to diversify our offerings to new customer segments, while maintaining high levels of service,” he added.
Iyad Kamal, chief operating officer at Aramex, said: “Over the third quarter, we invested into the growth of the business and into physical capacity on the ground with the ultimate objective of shortening delivery times and improving the overall customer experience.”
“Meanwhile, enhancing the efficiency of our operations through introducing advanced technologies across our first and last mile services remains a key focus to us. This quarter, we embarked on setting up three new facilities in Saudi Arabia in response to increasing shipment volumes into and within the country,” Kamal said.
“We also did a major upgrade in an advanced automation system at our facility in New York to streamline sorting, processing and shipment transit times from North America to the region, which is a growth lane for us. Our innovative new models, such as Aramex Fleet, place us in strong standing to handle the surge in capacity around the upcoming high season,” Kamal added.
Q3 2019 Performance:
Revenues from Aramex's cross-border International Express business grew by 3 per cent to Dh556 million ($151.38 million). International Express volumes grew by 13 per cent in Q3 2019 on the back of strong demand from USA, China and other Asian markets. While pressure on pricing impacted revenue growth and margins.
The Domestic Express business registered healthy growth of 6 per cent, reaching Dh271 million ($73.78 million). Domestic Express revenue would have grown by 13 per cent excluding the impact of the strategic restructuring in India, as well as currency fluctuations.
Domestic Express volumes rose by 29 per cent, due to strong demand in core GCC markets, including Saudi Arabia and the UAE, as well as a shift in e-commerce fulfilment business models from international to domestic, which has increased the demand for Aramex’s domestic last mile delivery services.
Freight Forwarding dropped by 4 per cent to Dh281 million ($76.51 million) due to continued regional economic uncertainty.
Aramex’s integrated logistics and supply chain solutions business continued to perform well, with revenues growing by 16 per cent to Dh88 million ($23.96 million) versus Q3 2018, owed in large part to increased demand from oil and gas customers, as well as a rise in the number of traditional retailers tapping into the multi-sales channel model.
Obeid said: “As we enter our busiest quarter of the year, we are well prepared to adapt to an expected surge in demand. We expect continued growth in international and domestic e-commerce volumes to support our topline growth over the period. At the same time, pressure on pricing will likely continue to impact revenue growth and profitability for the remainder of the year.”
“Our efforts remain firmly focused on further enhancing last-mile delivery solutions and service improvement to ensure Aramex maintains and grows its market share in the Express business. We will continue to expand segments across our B2B business, in order to maintain a secure and sustainable balance in revenues. We will also explore opportunities for inorganic growth, to bolster our service reach and operational capabilities,” concluded Obeid. – TradeArabia News Service
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