Aramex, the Middle East's biggest courier company, reported a 1 per cent increase in full-year net profit for 2019 on the back of higher revenue.
Net income for the period ending December 31 climbed to Dh497.4 million, the company said in a filing to the Dubai Financial Market, where its shares trade. Revenue rose 3 per cent to Dh5.2 billion. Net profit for the fourth quarter dropped 1 per cent to Dh152.5m while revenue in the last three months of the year grew 3 per cent to Dh1.4bn.
“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,” said Bashar Obeid, chief executive of Aramex.
“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.
The company is also investing heavily in its last mile operations, one of the most critical and competitive stages of the delivery journey, he added.
Last year, international express business for Aramex grew 3 per cent to Dh2.3bn, on higher volumes from the US, UK, Singapore and Saudi Arabia. The company's domestic express business climbed 5 per cent to Dh1.1bn, driven by a rise in domestic e-commerce across GCC and Australia.
Aramex also said performance was affected by the strategic restructure of operations in India and currency fluctuations. Excluding these two factors, domestic express would have grown 13 per cent in 2019. India's economy, which outpaced most other global economies in 2018, registered the sharpest slowdown last year since 2009, as the country faces a credit crisis and a soaring level of bad loans. Asia’s third-largest economy is forecast to grow 5.8 per cent this year, according to the International Monetary Fund.
In Aramex’s core markets, domestic express shipment volumes rose 27 per cent compared to 2018, driven by strong growth in Saudi Arabia and Egypt. However, the company’s freight-forwarding business declined 2 per cent to Dh1.1bn, due to continued regional economic uncertainty.
Logistics and supply chain management operations increased 18 per cent to Dh355m on the back of strong demand from traditional retailers for Aramex’s warehousing and other value-added services across key markets.
At the end of 2019, Aramex’s total cash stood at Dh1bn and free cash flow at Dh294m.
“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,” said Mr Obeid.
“Our efforts in 2020 will be focused on accelerating our business transformation roadmap across different areas in the company to realise synergies and lower cost of doing business on the ground. We will also continue our aggressive roll-out of the commercial restructuring process prioritising the B2B segment, to ensure we have a well-diversified revenue mix.”