Aramex Global Solutions

Feb 10, 2020

Published February 10th, 2020 - 08:34 GMT The company remains in a very strong cash position thanks to prudent financial management. (AFP) Aramex, a leading global provider of comprehensive logistics and transportation solutions, reported a 3 per cent increase in fourth quarter (Q4) revenue to Dh1.463 billion ($398.30 million), compared to Dh1.425 billion ($387.96 million) in Q4 2018. Full year revenue (ending December 31, 2019) increased by 3 per cent to Dh5.246 billion ($1.428 billion), compared to Dh5.086 billion ($1.384 billion) in FY 2018. FY 2019 net profit increased 1 per cent to Dh497.4 million ($135.42 million), compared to Dh492.6 million ($134.11 million) made in the year ago period, said a statement from the company. The Q4 net profit dropped slightly by 1 per cent to Dh152.5 million ($41.52 million), compared to Dh154 million ($41.93 million) in the year ago period. In Q4 2018, Aramex registered a one-off impairment of Dh46 million ($12.52 million) from the divestment of Aramex Global Solutions (AGS). The company remains in a very strong cash position thanks to prudent financial management; at the end of 2019, Aramex’s total cash stood at Dh1 billion ($272.25 million) and free cash flow of Dh294 million ($80.04 million). Bashar Obeid, chief executive officer of Aramex, said: “We are pleased with our resilient performance despite headwinds emanating from regional and global economic challenges and pricing pressure on our core business prompted by shifting e-commerce dynamics.” “In 2019, we strategically focused efforts on upgrading our operations and deepening our commitment to building a digital infrastructure that enables a higher service level to customers, more efficient processes to handle strong growth in shipment volumes and partial mitigation of impacts from pricing pressure, especially in our express business,” he said. Obeid continued: “More specifically, we invested heavily in the last mile operations, one of the most critical and competitive stages of the delivery journey. This has enabled us to become the leaders in last mile in our core markets.” “Simultaneously, we are fast tracking our commercial transformation process to encourage accelerated growth in our B2B business lines such as fashion retail, telecommunications, manufacturing, chemicals and healthcare, which will help us diversify our revenue mix. To extract more value from that business we are undergoing a restructuring of our commercial teams and processes, and expect it to increase its contribution to our performance in the coming quarters,” he added. Aramex's International Express business declined 4 per cent to Dh673 million ($183.23 million), compared to Dh702 million ($191.12 million) in Q4 2018. This decline is attributed to the continued pressure on pricing for e-commerce business in Aramex’s Asian markets, especially China and Hong Kong, despite the growth in volumes. E-commerce business from other markets including the UK and US witnessed double-digit growth compared to the year ago period. Domestic Express surged 20 per cent, to Dh324 million ($88.21 million), compared to Dh270 million ($73.51 million) in Q4 2018. The significant growth in this business line is attributed to the double-digit growth in core markets, notably from Saudi Arabia, Egypt and UAE. Excluding India restructuring and impact from exchange rate fluctuations, Domestic Express growth would have reached 26 per cent. Freight-Forwarding witnessed flat growth of Dh294 million ($80.04 million), from Dh293 million ($79.77 million) in Q4 2018. Meanwhile, Aramex’s oil and gas business registered healthy growth. Aramex continued to diversify across different geographies and strategic sector verticals, mainly fashion retail, manufacturing and healthcare, setting the foundation for a steady projected growth over the long term. Aramex’s Logistics and Supply Chain Management business grew by 15 per cent to Dh97 million ($26.41 million), compared to Dh84 million ($22.87 million) in Q4 2018, as a result of the growth of business across the company’s key markets, especially in the UAE and Saudi Arabia. The increase is driven by more traditional retailers choosing to tap omni-channel sales to compete with pure-play e-commerce companies. Iyad Kamal, chief operating officer at Aramex, said: “Over the course of the year we have invested in strategic ground infrastructure projects specifically in our core markets with the ultimate objective of boosting operational efficiencies and enhancing the overall customer experience.” “Our efforts, together with the continuous commitment and dedication of our passionate teams around the world, have enabled us to handle growth of 30 per cent in shipment volumes in our core markets efficiently with an improvement in delivery times,” Kamal said. “Those investments included the establishment of new fulfilment facilities, increasing the number of Aramex PickUp and Drop Off (PUDO) points to be closer to end recipients, and introducing more automation in our operational and back office processes,” Kamal added. Mohammed Sleeq, chief digital officer at Aramex, said: “In 2019, we have invested in several digital technologies with a strategic focus on enhancing customer experience, last mile transformation and modernising our core technology infrastructure.” “These investments helped reshape our digital identity to increase agility and speed innovation and efficiency across all business lines. Our data lake, which hosts a big data infrastructure that leverages machine learning and artificial intelligence capabilities, allows us to digitise the end-to-end customer experience and solve some of the industry challenges,” he said. “We also introduced Aramex Fleet and Spot, innovative solutions together forming a zero-asset tech-driven model that supports our capacity scalability efforts and solve last mile challenges, especially around peak periods. We will continue to invest in latest technologies that allow us to accelerate our digital transformation journey, improve service level to customers and realize higher efficiencies,” he added. Aramex's International Express business grew by 3 per cent to Dh2.349 billion ($639.52 million), compared to Dh2.273 billion ($618.83 million) in 2018, most notably coming from US, UK, Singapore and Saudi Arabia. In FY 2019 Domestic Express business grew by 5 per cent to Dh1.108 billion ($301.65 million), compared to Dh1.051 billion ($286.13 million) in 2018, driven by the rise in domestic e-commerce across GCC and Australia. Performance was impacted by the strategic restructuring of operations in India and currency fluctuations; excluding these two factors, domestic express would have grown by 13 per cent in 2019. In Aramex’s core markets, domestic express shipment volumes rose by 27 per cent compared to 2018, namely driven by strong growth in Saudi Arabia and Egypt. Aramex's freight-forwarding business declined by 2 per cent to Dh1.138 billion ($309.82 million), compared to Dh1.164 billion ($316.90 million) in 2018 due to continued regional economic uncertainty. Logistics and supply chain management operations over the year increased 18 per cent to Dh355 million ($96.65 million), compared to Dh302 million ($82.22 million) in 2018, due to the strong demand from traditional retailers for Aramex’s warehousing and other value-added services across key markets. Bashar Obeid said: “While we anticipate shipment volumes to continue to demonstrate healthy growth in the coming year, notably from our core markets, pricing pressure on e-commerce business is expected to continue over the coming period.” “Our efforts in 2020 will be focused on accelerating our business transformation roadmap across different areas in the company to realize synergies and lower cost of doing business on the ground. We will also continue our aggressive roll-out of the commercial restructuring process prioritizing the B2B segment, to ensure we have a well-diversified revenue mix,” he concluded.