DFM-listed Aramex flies into higher profits as turnaround plan shows results
Q3-24 profit was up 177% as Dubai firm's strategy starts to get results
Dubai: The UAE logistics services firm Aramex lifted its way into higher profits, with the bottom-line swinging into an eye-catching 177% growth during Q3-2024 to Dh27 million.
While the actual profit tally might be seen as modest, what it does show is Aramex’s strategy of raising cost efficiency and profitability might be paying off. Over the first nine months of 2024, profit was up Dh76 million, a healthy 45% increase.
"Each of Aramex’s product lines achieved double-digit revenue growth in Q3 2024, led by domestic express at 27%, followed by freight forwarding at 22%, logistics at 13% and international express at 10%," said a statement. "revenue growth is attributed to substantial volume growth, including a 34% increase in international express and 18% in domestic express, along with continued strength in freight volumes."
Although it is our smallest contributor to group revenue, logistics plays a strategic role at the heart of our transportation ecosystem.
But it wasn't a smooth ride for Aramex in the last 2-3 years. Post-Covid, the wider logistics industry itself was going through a transformation, and Aramex had its fair share. There were phases when losses turned up and with an accompanying margin squeeze. The latest numbers suggest that the 'comeback is truly on', said an analyst.
More 'quality revenue'
“Domestic express gained volumes and significantly improved profitability," said Othman Aljeda, Aramex CEO. "International express also reported good volume growth while the margin profile is adjusting based on the profile of the new business coming in.
"For our contract logistics product, we said we expected to see a turnaround in the second half of 2024 and this is what we are delivering. Our logistics business reported better quality revenue and improved profitability on the back of the actions we have taken."
'Nearshoring' opportunities
In the first 9 months, revenues came to Dh4.63 billion from an 11% boost.
“We are seeing important changes in our industry with e-tailers and brands nearshoring activities and bringing inventories closer to demand centers and to end consumers in our home markets," said Aljeda. "This means we are seeing increased volume flows towards services such as domestic express, and warehousing and fulfillment, in addition to freight forwarding and international express.
"The investments we are making across infrastructure, technology, and capabilities in each of our four products, are providing Aramex with a competitive edge in this new market environment.
"We are on track to meet our year-end targets and sustain our growth trajectory.”