Aramex posts Dh1.2b revenues in Q1

Aramex has taken several health and safety measures since the start of the Covid-19 outbreak in China.

Aramex on Thursday said its first-quarter revenues fell 3 per cent to Dh1.196 billion, compared to D1.234 billion the same quarter last year while net profit for the period sank 38 per cent to Dh67.4 million compared to Dh108 million in 2019 corresponding period.
Aramex has taken several health and safety measures since the start of the Covid-19 outbreak in China in January to protect the health and safety of its people, customers, operations, and other stakeholder groups.
"Just like all businesses around the world, the onslaught of the Covid-19 pandemic is challenging our operations, business model and financial standing. But as an essential industry operating under such difficult and stressful circumstances it has also revealed the truly heroic efforts of Aramex employees and has demonstrated the resilience of our business as evidenced by the limited impact on total revenue," Bashar Obeid, chief executive officer of Aramex, said.
"From a business perspective, it is too soon to say with certainty how severe and lasting the impact of the pandemic will be on our business. However, in Q1 our revenue mix has shifted on the back of considerable changes in consumer shopping behaviour and e-commerce trends, and we saw an increase in the cost of doing business," he said.

Business performance
Aramex's cross-border international express declined 10 per cent to Dh479.4 million, mainly owed to significant declines in volumes from China and Hong Kong origins as Covid-19 negatively impacted supply chain out of those markets, as well as global demand for Chinese goods. Also, rapid changes and interruptions in air, rail and land routes and operations pushed line haul costs higher, adding pressure to profitability margins of this service line.
Conversely, the domestic express business jumped 13 per cent to Dh289 million, due in large part to significant growth in demand from traditional retailers and major e-commerce players that have witnessed a surge in online deliveries, especially in Saudi Arabia and the UAE. While volumes in core markets grew by 34%, the cost to scale operations increased, weighing on margins.
Freight forwarding declined 8 per cent to Dh262.4 million as the Covid-19 pandemic slowed end-user demand. However, Aramex witnessed increased appetite from new verticals, including pharmaceuticals, life sciences and healthcare.
Logistics and supply chain management business experienced strong growth of 12 per cent to Dh95 million, as major retailer groups witnessed a spike in demand from online channels, as retail outlets were forced to close in line with government directives to help contain the spread of
Commenting on Aramex's outlook for the remainder of 2020, Bashar Obeid said the road to recovery is not yet clear.
"There is still a lot of uncertainty around how long lockdown measures and other movement restrictions will remain in place in countries where we have significant operations. There is also ambiguity around shifts in consumer demand trends in a post-Covid-19 world. This is why, over the coming period we are focused on remaining flexible when addressing clients' needs, while adapting to fast changing operating environment and remaining financially robust to weather a global economic downturn.
"At the same time, and more importantly, we remain committed to running our day-to-day operations efficiently and as safely as possible. Our business resilience in the face of ongoing challenges will ensure that we continue to protect shareholder value and defend our leading market position in our core markets," he said.
- business@khaleejtimes.com