Aramex’s Q1 hit by currency volatility but UAE e-com sees double-digit growth
Aramex’s financial results for the first quarter ended 31 March 2019 saw revenue growth of 4% to AED 1.234-billion, supported by double-digit growth in the UAE and Saudi Arabian e-commerce sectors, but weighed down by currency fluctuations, mainly in the Libyan Dinar, South African Rand and Australian Dollar.
Aramex says that if it weren’t for the currency fluctuations, it’s revenue growth would have been closer to 8% for the quarter.
Net Profit for the quarter rose by 4% to reach AED 108 million. Net profit was also negatively impacted by the amount of AED 10.6 million due to the implementation of IFRS16 and currency fluctuations.
However, Aramex’s strategic restructuring of domestic operations in India delivered a positive contribution of AED 6.7 million to net income. Excluding those impacts, the bottom line would have grown by 8%, the company said.
“We continue to benefit from the healthy growth in global e-commerce volumes; however, we have started witnessing pressure on International Express margins due to lower and more competitive pricing,” said Bashar Obeid, CEO of Aramex. “Our key priorities for this year are to continue to invest in upgrading our service level across all our core markets, while progressing aggressively in executing our digital transformation roadmap.”
Bashar Obeid, CEO of Aramex
“This will help us boost operational efficiencies to cater for rapidly changing e-commerce business requirements, including faster shipping and delivery solutions at lower costs,” he said. “Our Integrated Logistics and Supply Chain Management business had a great quarter, thanks to our efforts to mobilise assets and resources to capitalise on the increase in demand for those services, especially from regional retailers aiming to boost their online sales.”
Aramex's cross-border International Express business grew by 7% to AED 533 million. This performance is mainly attributed to the continuous growth in cross-border e-commerce, which registered double-digit growth across most of Aramex’s markets, mainly Turkey, Asia and North America. Shipment volumes surged by 22% in Q1 2019, yet lower margins prevailed.
The Domestic Express business dropped by 3% to AED 257 million, due in large part to the strategic restructuring in India and fluctuations in foreign currency, mainly in the South African Rand and Australian Dollar.
Excluding those factors, the business would have grown by 7%. The e-commerce Domestic Express business performed very well in GCC markets, and registered double-digit growth especially in Saudi Arabia and the UAE.
Freight Forwarding growth stabilised at 1% to AED 287 million, with Oil & Gas segment experiencing strong double-digit growth.
The Integrated Logistics & Supply Chain Solutions business experienced strong growth of 23% to AED 85 million, owed in large part to Aramex’s efforts to service the major regional retailers’ strong appetite to tap into omni-channel sales model, which led to strong demand for warehousing, sorting, and last mile delivery solutions.
Commenting on Aramex’s outlook for the remainder of 2019, Bashar Obeid said: "We continue to maintain a positive outlook for the remainder of the year. However, the fast-changing landscape means that we will have to grow market share by being more competitive with our pricing, more efficient with our offerings and exceling at the quality of our service. We will carry on investing in automation and other technologies as part of our digital transformation roadmap to improve our operations and enhance the overall customer experience.”
“Despite lower margins, we remain confident about our Freight Forwarding business, driven by our internal restructuring efforts, the introduction of new dedicated teams and our aggressive push into new verticals. We are also optimistic about the opportunity to expand our logistics and supply chain solutions in the region,” Obeid added.