Middle East-based Aramex has announced a 'resilient' performance from its operations last year, with e-commerce spurring strong growth in Express shipment volumes while business transformation efforts continued to drive operational efficiencies.
The company generated revenue of AED 1,463 million (US$ 398.3 million) in the final quarter of its 2019 financial year (October-December), an increase of 3% on the same period a year earlier while net profit dropped by 1% to AED 152.5 million. In Q4 2018, Aramex registered a one-off impairment of AED 46 million from the divestment of Aramex Global Solutions (AGS).
Full year 2019 revenue increased by 3% to AED 5,246 million and net profit rose increased by 1% to AED 497.4 million.
Last year, Aramex's Express shipment volumes surged 15% versus 2018 as a result of the strong growth in global e-commerce activities. However, revenue growth and margins continue to be impacted by e-commerce pricing pressure, the company underlined.
Commenting on the results, Aramex CEO, Bashar Obeid, said: “We are pleased with our resilient performance despite headwinds emanating from regional and global economic challenges and pricing pressure on our core business prompted by shifting e-commerce dynamics.”
He explained that in 2019, the company had “strategically focused efforts” on upgrading its operations and deepening its commitment to building a digital infrastructure that enabled a higher service level to customers, more efficient processes to handle strong growth in shipment volumes and partial mitigation of impacts from pricing pressure, especially in its express business.
“More specifically, we invested heavily in the last mile operations, one of the most critical and competitive stages of the delivery journey. This has enabled us to become the leaders in last mile in our core markets,” the CEO pointed out.
He noted that simultaneously, Aramex is fast tracking its commercial transformation process to encourage accelerated growth in its B2B business lines such as fashion retail, telecommunications, manufacturing, chemicals and healthcare, which will help the company diversify its revenue mix.
“To extract more value from that business we are undergoing a restructuring of our commercial teams and processes, and expect it to increase its contribution to our performance in the coming quarters,” he added.
The fourth quarter saw Aramex's International Express revenues decline by 4% to AED 673 million which was attributed to the continued pressure on pricing for e-commerce business in Aramex’s Asian markets, especially China and Hong Kong, despite the growth in volumes. E-commerce business from other markets including the UK and USA witnessed double-digit growth compared to the year ago period.
Domestic Express revenues surged 20%, to AED 324 million, driven by double-digit growth in core markets, notably Saudi Arabia, Egypt and UAE. Excluding restructuring in India and the impact from exchange rate fluctuations, Domestic Express growth would have reached 26%.
Commenting on the 2019 performance, Aramex's Chief Operating Officer, Iyad Kamal, said: “Over the course of the year we have invested in strategic ground infrastructure projects specifically in our core markets with the ultimate objective of boosting operational efficiencies and enhancing the overall customer experience. Our efforts, together with the continuous commitment and dedication of our passionate teams around the world, have enabled us to handle growth of 30% in shipment volumes in our core markets efficiently with an improvement in delivery times.”
Investments included the establishment of new fulfillment facilities, increasing the number of Aramex PickUp and Drop Off (PUDO) points to be closer to end recipients, and introducing more automation in the operational and back office processes.
Commenting on the outlook for 2020, Bashar Obeid said: “While we anticipate shipment volumes to continue to demonstrate healthy growth in the coming year, notably from our core markets, pricing pressure on e-commerce business is expected to continue over the coming period.”
He underlined that Aramex's efforts in 2020 will be focused on accelerating its business transformation roadmap across different areas in the company to realize synergies and lower cost of doing business on the ground.
“We will also continue our aggressive roll-out of the commercial restructuring process prioritizing the B2B segment, to ensure we have a well-diversified revenue mix,” he concluded.
