Aramex CEO: Looking ahead, we anticipate Q2 and Q3 2024 to continue to deliver volume growth
Aramex a global provider of comprehensive logistics and transportation solutions, today announced its financial results for the First Quarter ending 31st March 2024 which revealed it doubled its net profit.
In Q1 2024, Aramex reported 8% year-on-year (YoY) increase in Group Revenues, with strong contributions from all product lines reflecting the strength of its diverse portfolio. International Express emerged as a key driver, delivering remarkable volume growth of 44% in Q1 this year compared to the same period in 2023, leading to a revenue increase of 14% YoY. Domestic Express and Freight Forwarding were resilient, with Revenue growing by 5% and 3% YoY respectively. Logistics and Supply Chain Solutions maintained a stable performance in Q1 2024 compared to the same period last year, despite the challenges associated with currency devaluations in Egypt which negatively impacted revenues.
Effective management of the Group’s Selling, General, and Administrative Expenses (SG&A) saw a modest 4% YoY increase in Q1 this year, primarily attributed to increased selling expenses, as well as annual employee compensation adjustments.
Group Gross Profit surged by 10% to AED 395 million, in the first quarter of 2024 compared to AED 358 million in Q1 2023. EBIT and EBITDA also displayed robust growth, expanding by an impressive 47% and 18% YoY respectively. These gains reflect the Company’s commitment to continuously streamline operations and maximize cost-effectiveness, also evident in improved margins across Gross Profit, EBIT, and EBITDA. Notably, the Gross Profit Margin for Q1 2024 stood at 26%, marking a 70-bps improvement from the same period previous year, while the EBITDA margin increased by 110-bps to 12% compared to Q1 2023.
The Net Profit for Q1 2024 nearly doubled, reaching AED 47 million, marking two consecutive quarters of strong performance. The Net profit margin improved to 3%.
Aramex maintained a strong balance sheet position with Net Debt-to-EBITDA excl. IFRS16 ratio of 0.8x and a healthy cash balance of AED 571 million as of 31 March 2024. The Company also improved its working capital and delivered record low DSOs during the quarter.
Othman Aljeda, Chief Executive Officer, Aramex, said: “Our International Express delivered a 44% increase in volumes YoY in Q1 2024, while Domestic Express delivered a 7% increase, with both driven by new customer wins, as well as seasonality during Ramadan. Our freight forwarding product grew volumes double digit across land, sea and air while our Logistics and Warehousing product continued to support customers with 3PL and 4PL activities ensuring efficient logistics and fulfillment of goods in key markets.
During the first quarter of the year we injected significant volumes into our network while maintaining high service levels. I am proud of my team’s performance and commend the hard work of every Aramexian, for their dedication and capability to handle significant volume growth and heightened consumer activity, seamlessly delivering the level of service our customers value.
Our ongoing investment in automation and operational optimization remains a core advantage and has ensured that our network is agile and responsive to our customer needs and market dynamics. Furthermore, our focus on technologies, such as last-mile route optimization, is yielding results, significantly enhancing operational efficiency. This strategic approach enables us to accommodate increased growth effectively. “
Commenting on the outlook for 2024, Mr. Aljeda continued: “Looking ahead, we anticipate Q2 and Q3 2024 to continue to deliver volume growth YoY, albeit at a softer rate compared to the levels seen during the peak seasons in Q1 2024 and in Q4 2023 due to seasonality. We will continue to manage our cost base and SG&A to ensure profitable growth. Our focus remains on working towards our long-term ambition, which involves delivering quality service and enhancing our operational efficiency to meet the evolving needs of all our stakeholders.
From a capital allocation perspective, our priority for this year is debt repayment of approximately USD $50-70 million, to lower our interest expenses in today’s high-rate environment. We will also maintain capex at similar levels to last year, to continue investments in critical projects such as warehouse expansion, automations and technology rollout.”
