Aramex profit grows 3% on higher revenue in first quarter

Turnover rose 2% annually to $394.8m during the period

Aramex chief executive Othman Aljeda says the company enjoyed a 'strong start' to the year. Silvia Razgova / The National

Aramex, the Middle East’s biggest courier company, reported a 3 per cent annual rise in net profit on higher revenue and improving global operations.

Net profit for the three-month period through to the end of March rose to Dh47 million ($12.8m), Aramex said on Thursday in a statement to the Dubai Financial Market, where its shares are traded.

Excluding the impact of write-offs from discarded technology, net income rose by 14 per cent to Dh52m during the period, it said.

Revenue rose 2 per cent annually to Dh1.45 billion, bolstered by the strong performance of the company's logistics and freight-forwarding business.

Aramex enjoyed a “strong start” to the year, with profit margins beginning to stabilise, chief executive Othman Aljeda said.

“This is predominantly attributed to the strategic decision to boost contribution from the freight-forwarding and logistics business to our revenue mix,” he said.

“It is also driven by improving global operating conditions, as well as the realisation of cost and operating efficiency enhancements in the courier business.”

Logistics and cargo companies registered a sharp growth in business in 2020 after the onset of the Covid-19 pandemic.

However, the industry has also been hit with rising costs due to supply chain bottlenecks, which, in turn, have put pressure on the margins of freight-forwarding companies.

Aramex's operating profit at the end of the three-month period slipped 6 per cent to Dh75m.

Revenue at its courier business — which includes domestic and international express operations, as well as business-to-business and e-commerce offerings — also fell 9 per cent to Dh911m during the first quarter of 2022.

The company attributed the drop to slowing demand for e-commerce as travel picked up.

The Covid-19 years of 2020 and 2021 were “a black swan event” for the business, said Alaa Saoudi, chief operating officer of Aramex Express.

“We witnessed unexpected surges in volumes because of the global lockdown," he said.

“However, over the past three months, as most countries reopen and the majority of consumers return to normal shopping habits, we inevitably saw a softening in volumes in cross-border express.”

Aramex's logistics and freight-forwarding business reported a 28 per cent growth in revenue to Dh503m during the first quarter, supported by growth in the retail, e-commerce and oil and gas sectors.

The courier company will continue to “pursue value-accretive acquisitions over the course of the year” to grow its operations, Mr Aljeda said.

Earlier this year, Alpha Oryx, a company related to investment holding conglomerate ADQ, transferred a 22.32 per cent stake in Aramex to the Abu Dhabi Ports Group.

In October, France's parcel delivery company GeoPost, a business owned by Le Groupe La Poste, also bought a 20.15 per cent stake in Aramex for Dh1.4bn, according to a filing on the DFM at the time.