Aramex plans 2-3 acquisitions, 5 start-up investments in 2016 - Gulf Business
Now Reading
Aramex plans 2-3 acquisitions, 5 start-up investments in 2016

Aramex plans 2-3 acquisitions, 5 start-up investments in 2016

Logistics firm plans to diversify its business with a focus on e-commerce

UAE-based logistics provider Aramex is planning two-to-three acquisitions this year and investments in up to five start-ups as part of plans to diversify its business.

Last month, the company announced the acquisition of Australian/New Zealand firm Fastway Couriers for $80.59m.

The new deals will be financed by a $150m five-year loan the company closed last year, which has an option to extend by a further $150m, CFO Bashar Obeid said.

CEO Hussein Hachem told reporters the company would look for acquisitions in Asia and Africa, which account for around 18 per cent and 15 per cent of the company’s business respectively, following the Fastway acquisition, compared to around 50 per cent for the Middle East.

In 2014, Aramex also acquired PostNet South Africa and Australia’s Mail Call Couriers for $16.5m and $26m respectively.

The two growth markets will continue to contribute higher amounts to the companies revenue mix, he said, and the firm may look at further deals in the United States. In May 2015, Aramex acquired a 25 per cent stake in Dubai-based WS One Investments, which operates out of Ohio, for Dhs 9m.

Hachem said the company would particularly be focusing on the ‘small parcel’ B2C e-commerce market where it sees considerable opportunities for growth.

In contrast, the company’s freight revenues declined 3 per cent last year to Dhs 1.2bn due to lower selling rates driven by volatile oil prices and currency fluctuations.

The firm has a deal with e-commerce giant Amazon that allows customers in the Middle East to order items and pay cash on delivery. It will also sign up another major retailer out of the US in the coming weeks and is targeting UK retailers, following an online marketplace deal signed with online payments firm PayPal in January, Hachem revealed.

The CEO told Gulf Business the firm’s start-up investments would focus on businesses with synergies with its mobile application and e-commerce offering. He expected the investments to range from $0.5m to $3m.

“We believe in investing in start-ups. Hopefully over the course of the year we’ll announce a couple of investments,” he said.

Earlier today, the company posted a 2 per cent decline in 2015 net profit and said its revenues were hit by currency fluctuations, resulting in a 4.4 per cent negative impact on growth.

Exposure to currencies, including the euro, South African rand, and Australian dollar, pushed the company’s revenue growth down from 9.4 per cent to 5 per cent, it said. Revenue for the year was Dhs 3.83bn compared to Dhs 3.64bn in 2014.

Aramex’s net profit decreased by 2 per cent to Dhs 311m down from Dhs 318m in 2014. This was due to an employee incentive scheme in Q4, which reduced net profit by 36 per cent year-on-year from Dhs 89.4m to Dhs 57.6m.

Excluding the scheme, Aramex said its net profit in Q4 would have grown 16 per cent to Dhs 104m and increased 12 per cent for the full year to Dhs 358m.

Obeid said the company had spent roughly $12.5m in 2015 on the incentive scheme, designed to retain key employees, and would spend roughly $5m and $2.5m in 2016 and 2017 respectively.

You might also like


Scroll To Top