Aramex sticks with growth target as courier lines up acquisition this year

The company made a net profit of Dh74.6 million in the three months to September 30.

Aramex is planning another acquisition before the end of the year as it maintains its full-year growth targets

The Dubai-listed courier company is forecasting a 10 per cent increase in full-year net profit, despite positing a worse-than-expected 7.3 per cent rise in third-quarter profit, the chief executive of the Dubai-based courier said yesterday.

Aramex’s net profit in the three months to September 30 rose to Dh74.6 million compared with Dh69.5m a year earlier. Revenue grew 2 per cent to Dh937.5m from a year ago .

Profit could have increased by 10.5 per cent and revenue by 6 per cent without the impact of currency fluctuations and lower oil prices, Hussein Hachem said.

Growth in the third quarter was driven by an increase in on-line shopping, which provides the company with high margins.

Third-quarter net profit missed expectations mainly owing to lower oil prices and currency fluctuations, according to Egypt’s Naeem Holding.

“Overall, the results are weak, missing our estimate predominantly on the back of lower growth (hurt by FX exposures and oil price fluctuations) and in addition, operating leverage factors (a fixed-cost base, growing faster than sales),” Naeem said in a report.

“Nevertheless, Aramex continues to post absolute growth across all of its markets and business segments, with e-commerce consistently being the best performing segment .”

Naeem, which has a buy rating for Aramex, said the outlook for the company remains positive because of its e-commerce business and strategy to diversify services through expansion.

Aramex is planning to finalise at least one acquisition in Asia this year to help its e-commerce business to grow.

Mr Hachem said it was in the final stages of announcing “at least one or two” acquisitions servicing demand from predominantly e-commerce clients.

In May, Aramex agreed to buy a 25 per cent stake in WS One Investments for Dh9 million. Dubai-based WS operates out of Ohio in the US and provides cross-border mailbox consolidation.

Aramex last year acquired PostNet South Africa for $16.5m and Australia’s Mail Call Couriers for $26m.

Aramex is still weighing up entry into a partnership with Egypt’s Orascom Telecom Media and Technology (OTMT) to set up logistics areas in the North African country, said Mr Hachem. Aramex said last month its board had delayed making a decision.

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