Dubai’s Aramex posts 38% dip in Q1 2020 net profit

Logistics and transportation service provider Aramex posted Dhs67.4m in net profits for the first quarter ending March 31, 2020, down 38 per cent from Dhs108m in Q1 2019.

Aramex’s Q1 2020 revenues fell 3 per cent to Dhs1.19bn, compared to Dhs1.23bn in Q1 2019. Meanwhile, its Q1 2020 logistics and supply chain management revenue rose 12 per cent and its total international express volumes increased 5 per cent in Q1 2020.

Business performance
Aramex’s cross-border international express declined 10 per cent to Dhs479.4m, primarily due to significant declines in volumes from China and Hong Kong origins as Covid-19 adversely impacted supply chain out of those markets, as well as global demand for Chinese goods.

Also, alterations and interruptions in air, rail and land routes and operations increased line haul costs, adding pressure to profitability margins of this service line.

Meanwhile, the domestic express business jumped 13 per cent to Dhs289m, largely due to significant growth in demand from traditional retailers and major e-commerce players led by substantial growth in online deliveries, especially in Saudi Arabia and the UAE, on account of movement restrictions imposed by local governments.

Freight forwarding declined 8 per cent to Dhs262.4m as the Covid-19 pandemic slowed end-user demand. However, Aramex experienced increased growth in new verticals, including pharmaceuticals, life sciences and healthcare.

Logistics and supply chain management business experienced strong growth of 12 per cent to Dhs95m, as major retailer groups witnessed a spike in demand from online channels.

Since the start of the outbreak in China, Aramex has taken multiple measures to protect the health and safety of its people, customers, operations, and other stakeholder groups. These include strict hygiene and social distancing measures in line with public health authorities’ and World Health Organization’s recommendations.

Aramex continues to equip its employees with necessary personal protective equipment including masks, gloves and hand sanitisation products.

It has also stepped up the intensity and frequency of disinfecting its facilities, vehicles and all touch points. Aramex conducts daily body temperature checks for all its employees before entering all facilities, including corporate buildings, using high end infra-red thermometers.

Since February, the management has restricted business travel and since March employees not directly involved in on-ground operations, have been working remotely.

“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,” said Bashar Obeid, chief executive officer of Aramex.

“Our number one priority is the health and safety of our employees, customers and communities. As the pandemic spread across the world, we intensified our efforts to protect the health and safety of Aramex employees and other stakeholders.

“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.

“Over the period we have also intensified our commercial aspirations by targeting companies in the pharmaceutical, life sciences and healthcare sector. We are confidently servicing new clients and we expect to continue to see an increase in activity from those critical industries and sectors over the coming periods.”

Iyad Kamal, chief operating officer, Aramex, said: “Since the start of the Covid-19 outbreak in January, we had to rapidly adapt and address several operational hurdles and challenges which affected each one of our business lines.

“The digital transformation efforts that we carried out over the last two years have had a positive impact on our operations throughout the first quarter. Those efforts include strategic upgrades to our technology across all touch points, significant improvements in our tech-powered last mile operations, and investments in ramping up our warehousing and logistics capabilities. We will continue to work very hard to optimise our operations and increase operational efficiencies despite the current challenges,” Kamal added.