Aramex, a leading global provider of comprehensive logistics and transportation solutions, today announced its financial results for the First Quarter (“Q1”) ending 31st March 2023.
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| In Thousands of UAE Dirhams | Q1
2023 |
Q1
2022 |
% Change (YoY) |
| Revenues | 1,431,496 | 1,448,932 | (1%) |
| Gross Profit | 358,000 | 344,100 | 4% |
| Gross Profit Margin | 25.0% | 23.7% | |
| EBIT | 63,000 | 75,006 | (16%) |
| EBIT Margin | 4.4% | 5.2% | |
| EBITDA | 153,163 | 168,669 | (9%) |
| EBITDA Margin | 10.7% | 11.6% | |
| Net Profit | 23,909 | 47,302 | (49%) |
| Net Profit Margin | 1.7% | 3.3% |
Financial Performance Commentary
Aramex’s Q1 2023 Revenues declined marginally by 1% YoY to AED 1.43 billion, reflecting the robustness of its revamped operating model amid global headwinds. Revenues were driven by stable performance in International Express and the resilience of the Freight-Forwarding, and Logistics and Supply Chain Solutions Businesses. Revenue continued to be impacted by currency fluctuations, inflationary pressures, and the normalisation of worldwide shipping flows. However, despite softening revenues, the Company demonstrated resilience in volumes and margin improvements.
For the Q1 2023 period, Gross Profit was up 4% to AED 358 million compared to AED 344 million in Q1 2022, while the corresponding Gross Profit Margin for Q1 2023 was reported at 25%. The Selling, General and Administrative Expenses (SG&A) costs for the organic business, which excludes MyUS, declined 3% YoY, reflecting the Company’s disciplined cost optimisation drive. In comparison, consolidated Group SG&A costs increased by 6%, mainly due to the addition of MyUS. The Group’s SG&A organic structure as a percentage of revenue has remained stable.
Net Profit for Q1 2023 declined by 49% YoY to AED 24 million due to a mix of factors, including currency devaluation in specific markets, interest expenses associated with the MyUS acquisition and in line with Aramex’s strategy to leverage the balance sheet, as well as the softening at topline flowing through to the bottom line.
Due to negative FX and devaluation in some markets, Aramex moved swiftly to hedge exposures and move into more US Dollar-denominated contracts.
Aramex maintained a strong balance sheet position with a Net Debt-to-EBITDA ratio of 2.3x and a healthy cash balance of AED 722 million as of 31 March 2023.
Othman Aljeda, Chief Executive Officer, Aramex, said, “In a quarter when our industry globally continued to face headwinds from cost inflation, base rate rises, softening shipment volumes and FX fluctuations, we are proud to present a stable and resilient financial and business performance for the first three months of 2023. We continued to drive revenue quality and benefit from our sustained investment in efficiency. Our performance vs industry means we are confident in unlocking the potential of our rebalanced business model.
Three of our four business lines increased Gross Profit Year-on-Year. We maintained a stable Profit Margin in our Domestic Express business due to our relentless focus on cost control and productivity improvements. We support our commitment to investing in optimisation measures across the economic cycle, including the automation of the shipments sorting process, which enables us to boost operational productivity, and the newly launched Enterprise Automation & Robotic Process Automation Centre of Excellence that is focused on digitalising the overall enterprise for higher efficiency levels within the support functions as well as across our operations.
The continued growth in the GCC economies and the expectation that inflationary pressures worldwide may peak and then decline significantly show some signs of optimism towards the end of the year. The critical differentiator in the months ahead will be our ability to invest in technology and our geographic and business line diversification, which offers a competitive advantage.
We will continue improving our services’ efficiency, enhancing customer experience, strengthening road networks, improving resourcing and making other targeted operational improvements across our four products – putting us in a solid position to capture market share and deliver long-term value for our shareholders.”
Business Performance
International Express (Including Shop & Ship and MyUS)
| In Thousands of UAE Dirhams | Q1
2023 |
Q1
2022 |
% Change (YoY) |
| Revenues | 566,581 | 558,976 | 1% |
| Gross Profit | 183,795 | 177,782 | 3% |
| Gross Profit Margin | 32.4% | 31.8% |
International Express Shipment Volumes
| In millions of shipments | Q1
2023 |
Q1
2022 |
% Change (YoY) |
| Total Number of Shipments | 5.4 | 5.3 | 1% |
International Express reported stable consolidated Revenue of AED 567 million in Q1 2023, reflecting the additional volume from MyUS and attractive margins in Aramex’s Parcel Forwarding Business, which includes MyUS and Shop & Ship. Organic Revenue (excluding MyUS) witnessed a softness Year-on-Year due to a change in customer mix.
Reported Gross Profit for Q1 2023 was AED 184 million, a YoY increase of 3%. The corresponding Gross Profit Margin was maintained at 32% due to a number of factors, including improvements in linehaul costs and other cost optimization measures.
Domestic Express
| In Thousands of UAE Dirhams | Q1
2023 |
Q1
2022 |
% Change (YoY) |
| Revenues | 361,652 | 376,641 | (4%) |
| Gross Profit | 87,637 | 92,767 | (6%) |
| Gross Profit Margin | 24.2% | 24.6% |
Domestic Express Shipment Volumes
| In millions of shipments | Q1
2023 |
Q1
2022 |
% Change (YoY) |
| Total Number of Shipments | 24.6 | 25.0 | (2%) |
Domestic Express Q1 2023 Revenue declined by 4% to AED 362 million due to FX impacts in Egypt, Lebanon, South Africa and certain MENAT countries, and a revenue decline in Oceania, where a restructuring plan is in progress. This was partially offset by increased domestic revenues from the GCC and prudent cost management. Gross Profit for the period was AED 87.6 million, a slight decrease of 6%. However, the corresponding Gross Profit Margin remained stable at 24% compared to the same period last year, reflecting the Company’s success in operational efficiencies, especially at the “last mile” as a result of the Company’s automation efforts- which further enhanced courier productivity; and a doubling of Aramex’s Pick-Up and Drop-Off (PUDO) network in Q1 2023.
Freight-Forwarding
| In Thousands of UAE Dirhams | Q1
2023 |
Q1
2022 |
% Change (YoY) |
| Revenues | 385,432 | 391,133 | (1%) |
| Gross Profit | 61,151 | 52,053 | 17% |
| Gross Profit Margin | 15.9% | 13.3% |
Freight-Forwarding Shipment Volumes
| Q1
2023 |
Q1
2022 |
% Change (YoY) | |
| Air Freight (KGs) | 11,158,986 | 12,740,840 | (12%) |
| Sea Freight (FCL TEU) | 7,004 | 8,142 | (14%) |
| Sea Freight (LCL CBM) | 6,072 | 5,225 | 16% |
| Land Freight (FTL) | 6,829 | 7,271 | (6%) |
| Land Freight (LTL KGs) | 36,357,056 | 36,921,430 | (2%) |
Aramex’s Freight-Forwarding business delivered a robust performance in the first quarter, with Revenue maintained at AED 385 million and a 17% increase in Gross Profit at AED 61 million. This was driven by the positive impact of operational efficiencies, including an increased focus on realizing quality revenue and consolidation of trucking resources between freight and logistics products. Revenue growth in Africa and America, stable revenues in the GCC and MENAT, and newly opened freight services in Oceania contributed to the revenue growth in the Freight-Forwarding business.
Logistics and Supply Chain Solutions
| In Thousands of UAE Dirhams | Q1
2023 |
Q1
2022 |
% Change (YoY) |
| Revenues | 107,044 | 112,105 | (5%) |
| Gross Profit | 16,203 | 13,171 | 23% |
| Gross Profit Margin | 15.1% | 11.7% |
Logistics and Supply Chain Solutions Revenue decreased marginally by 5% to AED 107 million in Q1 2023. Gross Profit increased by 23% to AED 16.2 million, with a gross profit margin of 15.1% – up from 11.7% in Q1 2022. Solid performance in the GCC, Europe and South Africa, driven by sectors such as Retail, e-Commerce, Pharma and Oil &Gas, contributed to this growth.