Weak Q3 profit growth at Aramex

Arabian Gulf delivery company Aramex has blamed pricing pressures from e-commerce on lower than expected profit growth for the third quarter (Q3) of 2019.

For the three quarters to September 2019, revenues grew at Aramex by 3% to AED 3,782 million.

For Q3, revenues grew by 2% to AED 1,270 million as against AED 112.9 million in the same quarter 2018. Net profits only grew by 1% to AED 113.8 million. This has been attributed to pricing pressure from cross-border e-commerce trade as well as the implementation of IFRS16.

Commenting on the results, Bashar Obeid, Chief Executive Officer of Aramex, said: “We are pleased to see strong growth in Aramex’s e-commerce volumes despite pricing pressure witnessed across the e-commerce industry.

”As we expect the low-margin environment to continue over the next quarter, we will remain focused on improving service levels on the ground to prioritise quality across the delivery journey; and optimising costs throughout the business to build further resilience. We believe that business transformation and cost optimisation are becoming necessary than ever to compensate for the continued investments in upgrading our last mile delivery operations, as well as the pricing pressure on e-commerce business.

“We remain confident in the strategic direction we have taken to maintain and support the growth of our e-commerce business across the region. This opportunity is supported by the promising growth of our B2B service lines as a result of efforts to diversify our offerings to new customer segments, while maintaining high levels of service,” added Obeid.

Iyad Kamal, Chief Operating Officer at Aramex, added: “Over the third quarter, we invested into the growth of the business and into physical capacity on the ground with the ultimate objective of shortening delivery times and improving the overall customer experience. Meanwhile, enhancing the efficiency of our operations through introducing advanced technologies across our first and last mile services remains a key focus to us.

This quarter, we embarked on setting up three new facilities in Saudi Arabia in response to increasing shipment volumes into and within the country. We also did a major upgrade in an advanced automation system at our facility in New York to streamline sorting, processing and shipment transit times from North America to the region, which is a growth lane for us. Our innovative new models, such as Aramex Fleet, place us in strong standing to handle the surge in capacity around the upcoming high season.”

Commenting on Aramex’s outlook for the remainder of 2019, Bashar Obeid said: “As we enter our busiest quarter of the year, we are well prepared to adapt to an expected surge in demand. We expect continued growth in international and domestic e-commerce volumes to support our topline growth over the period. At the same time, pressure on pricing will likely continue to impact revenue growth and profitability for the remainder of the year.

“Our efforts remain firmly focused on further enhancing last-mile delivery solutions and service improvement to ensure Aramex maintains and grows its market share in the Express business. We will continue to expand segments across our B2B business, in order to maintain a secure and sustainable balance in revenues. We will also explore opportunities for inorganic growth, to bolster our service reach and operational capabilities,” concluded Obeid.

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