Aramex CEO: The softness in e-commerce activity is a global, industry-wide trend
- H1 2022 Revenue was AED 2.97 billion, a 1% decline from the same period a year ago. The lower performance of the Courier business was offset by solid progress in Logistics and Freight Forwarding business. Q2 2022 Revenue declined 3% YoY to AED 1.52 billion due to lower Courier volumes.
- On a group level, GP margins remained stable over both the Q2 and six-month periods, driven by accelerated growth in the Logistics and Freight-Forwarding business and efficiencies in the Courier business.
- In H1 2022 Net Profit declined by 18% YoY to AED 91.9 million mainly attributed to softer revenues, and also partially impacted by the exchange rate impact, namely the Lebanese Pound and Egyptian Pound. Net Profit in Q2 declined 32% to AED 44.6 million. Excluding the impact of write-offs from discontinued technologies and other one offs, Normalized Net Profit for H1 2022 decreased 13% YoY to AED 96.9 million.
- Year to date, the Company has sustained a very healthy liquidity profile with positive free cash flows, a cash balance of AED 592 million and a debt to EBITDA ratio of 0.5x excluding IFRS 16. Aramex’s strong balance sheet will support the Company’s growth strategy including investments in digital and technological infrastructure as well as its active M&A pipeline.
During the reporting period, in May 2022, the Company distributed FY 2021 dividends of AED 0.13 per share, or AED 190.3 million, to its shareholders.
Othman Aljeda, Chief Executive Officer of Aramex, said: “One of the greatest changes we have seen in our business in the first half of 2022 is the change in our revenue mix. Our Freight-Forwarding and Logistics business was the star performer, helping offset the softness we have seen in the Courier business.
The double-digit top-line growth of Freight-Forwarding, and the growth in Logistics is owed to our strategic investment in expanding our operations and market share, and boosting our capabilities in that business. The organic growth year to date is predominately driven by high growth sectors such as industrials, SMEs, Retail and Pharmaceuticals.
Our courier business is facing industry headwinds. Despite this, we have been able to protect and maintain our gross profit margin.
The softness in e-commerce activity is a global, industry-wide trend as consumers returned to brick-and-mortar shopping as COVID restrictions eased. We are also seeing rising inflation rates globally, which puts downward pressure on discretionary spending.
Going forward, our focus is on quality earnings and better efficiencies, by optimizing resources, and strengthening our end-to-end product and service offering across Courier, Freight, Logistics, Warehousing, and Supply Chain.
During the period, we announced the acquisition of MyUS, a global cross-border e-commerce enabler, which is set to bolster Aramex’s cross-border business and expand our geographic reach and footprint in the US, a key growth market. The transaction is expected to be fully completed during the third quarter of this year.”
- DPDgroup, Aramex’s largest single shareholder, increased its equity stake in the Company to 28% during the reporting period, demonstrating its confidence in Aramex’s ability to create value over the long term. The strategic collaboration continues to progress nicely with new trade lanes opened in the first half of the year to increase connectivity between GCC and Europe.
- Operational efficiency continues through the automatization of warehouses and roll out of AI solutions across the entire logistics life cycle. The Company also scaled its presence for a more efficient last mile operation by expanding its pick up drop off locations and FLEET, Aramex’s crowd-based delivery platform.
- Aramex’s investments in new technologies are progressing well including the optimization of internal systems and enhancements in operational infrastructure, particularly in high-volume markets such as Egypt and Qatar.
Business Performance Highlights
- Aramex’s Courier business includes International Express and Domestic Express and offers delivery and last mile solutions serving the B2B and B2C customer base including Shop & Ship, e-commerce, FMCG, SMEs and others.