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Aramex reports revenue of $335.9m in Q1

Aramex, a leading global provider of comprehensive logistics and transportation solutions, has reported a revenue of Dh1.234 billion ($335.96 million) for first quarter ended March 31, 2019, an increase of 4 per cent over Dh1.190 billion ($323.98 million) for the same period last year.

Revenues would have grown by 8 per cent excluding the impact from currency fluctuations, mainly in the Libyan Dinar, South African Rand and Australian Dollar; and the company’s strategic restructuring of its domestic operations in India, said a statement from Aramex.

Net profit for the quarter rose by 4 per cent to reach Dh108 million ($29.40 million), compared to Dh103 million ($28.04 million) in Q1 2018, it said.

Net profit was negatively impacted by the amount of Dh10.6 million ($2.89 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 Dh6.7 million ($1.82 million) to net income. Excluding those impacts, the bottom line would have grown by 8 per cent.

Bashar Obeid, chief executive officer of Aramex, 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.”

“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. 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,” he added.

Iyad Kamal, chief operating officer at Aramex, said: “In Q1 2019, we continued to improve operating efficiencies and accelerated our digital transformation efforts in order to enhance service levels, especially in the last-mile delivery.”

“These initiatives will help us win in the long-term, as we will be able to handle more capacity more efficiently and at a lower cost. Another trend that positively impacted our business this quarter was the entrance of major Middle East retailers into the online sales space as part of an omni-channel approach, which is why we are investing in servicing this promising market,” he said.

“We also launched our new, partially automated fulfilment centre at Dubai Logistics City, which has improved our logistics and supply chain management solutions and offering,” he added.

“Our operating expenses have increased by 8 per cent in Q1 2019 following the expansion of our infrastructure in key markets like Saudi Arabia. Today, we have more than 150 pick-up points across Saudi Arabia with aggressive plans to further expand our presence, in an effort to make it as convenient as possible for customers to pick up their packages and ship with our company,” Kamal concluded.

Aramex's cross-border International Express business grew by 7 per cent to Dh533 million ($145.11 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 per cent in Q1 2019, yet lower margins prevailed.

The Domestic Express business dropped by 3 per cent to Dh257 million ($69.97 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 per cent. 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 per cent to Dh287 million ($78.14 million), with oil and gas segment experiencing strong double-digit growth.

The integrated logistics and supply chain solutions business experienced strong growth of 23 per cent to Dh85 million ($23.14 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.

Obeid continued: “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,” he said.

“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,” concluded Obeid. – TradeArabia News Service

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