Aramex Q3: Domestic express gained volumes and significantly improved profitability
Aramex announced its financial results for the third quarter and first nine months of the year ending 30 September 2024, revealing double-digit revenue growth across all product lines.
Financial Performance Commentary
In the third quarter of 2024, Aramex delivered results in line with expectations, reporting solid revenue of AED 1.59 billion, marking a strong 18% year-on-year (YoY) increase. This growth was driven by consistent volume gains across all product lines.
The GCC region was a major contributor, posting 21% YoY revenue growth in Q3 2024 and accounting for 41% of the Group’s total revenues, reaffirming Aramex’s strong position in its home markets. MENAT also demonstrated significant growth with a 33% YoY revenue increase in Q3 2024, while Oceania improved both revenue and profitability as part of the ongoing turnaround plan.
Each of Aramex’s product lines achieved double-digit revenue growth in Q3 2024, led by Domestic Express at 27%, followed by Freight Forwarding at 22%, Logistics at 13% and International Express at 10%. Revenue growth is attributed to substantial volume growth, including a 34% increase in International Express and 18% in Domestic Express, along with continued strength in Freight volumes.
Group Selling, General, and Administrative Expenses (SG&A) remained stable as a percentage of revenue, consistent with previous quarters. Expenses increased marginally, driven by higher salaries from new hires, investments in IT software, and legal costs linked to acquisitions within the Oceania franchise network.
Gross profit for the quarter stood at AED 373 million, reflecting an 11% year-on-year growth, with a slight softening in the Gross Profit margin to 23% during Q3 2024 compared to the same period last year, mainly due to intense competition in Freight and a softening in the International Express business. EBITDA margin also stood at a robust 10% for the first nine months of 2024, reinforcing the prudent cost management and strength of Aramex’s operational strategies.
Net profit for Q3 2024 was AED 27 million, representing a 177% YoY growth, positioning the Company on the right track with its strategic goal to improve profitability. For 9M 2024, Net Profit was reported at AED 76 million, a 45% increase from same period the prior year.
As of September 30th, the Effective Tax Rate (ETR) for the last twelve months was 21%. For the full year, the Company forecasts an increase in the ETR to approximately 27% due to anticipated non-recurring items and also a change in the profit mix during the year, with more contributions from higher tax jurisdictions.
Aramex maintained a strong balance sheet position with Net Debt-to-EBITDA ratio of 2.1x incl. IFRS16 and a healthy cash balance of AED 447 million as of September 30, 2024.
Othman Aljeda, Chief Executive Officer of Aramex, said: “We made good progress this quarter and we see our recovery story advancing. I would like to thank all our employees for their contribution and dedication to Aramex.
“Domestic express gained volumes and significantly improved profitability. International express also reported good volume growth while the margin profile is adjusting based on the profile of the new business coming in. For our contract logistics product, we said we expected to see a turnaround in the second half of 2024 and this is what we are delivering. Our logistics business reported better quality revenue and improved profitability on the back of the actions we have taken. Although it is our smallest contributor to group revenue, logistics plays a strategic role at the heart of our transportation ecosystem.
“In freight forwarding, the operating environment remains challenging. We reported further pressure in our freight forwarding margins and we are in the process of reassessing certain activities for this product.
“We are seeing important changes in our industry with e-tailers and brands nearshoring activities and bringing inventories closer to demand centers and to end consumers in our home markets. This means that we are seeing increased volume flows towards services such as domestic express, and warehousing and fulfillment, in addition to freight forwarding and international express. The investments we are making across infrastructure, technology, and capabilities in each of our four products, are providing Aramex with a competitive edge in this new market environment.
“Looking ahead, we are on track to meet our year-end targets and sustain our growth trajectory.”
