Online-based orders streaming in helped volumes right through the first six months at Aramex. But profit margins remain tight. Image Credit: Gulf News Archive

Dubai: Aramex managed to ride the ecommerce demand spike to generate revenues of Dh1.33 billion between April to end June, a gain of 4 per cent over same period in 2019.

For the first six months, topline numbers were up 1 per cent to Dh2.52 billion.

But it was on profitability that the logistics company took a hit – second quarter net was down 23 per cent to Dh94.4 million. This was brought about by “unforeseen costs” stemming from the COVID-19 outbreak.

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This in turn led to “exceptional challenges in cross-border operations due to border closures, [and]increase in line-haul costs, which in turn impacted profit margins in both international express and freight,” the company said in a statement.

Net profit for the first six months is down 30 per cent to Dh162 million from the Dh231 million a year ago.

What of rest of the year?

According to Bashar Obeid, CEO, “We are not out of the woods yet - the shape of the global economic recovery is still uncertain. And it is too early to determine a clear trend or change in consumer behavior.

"However, we are optimistic that growth in e-commerce will continue to drive healthy shipment volumes and expect to continue to see solid growth in the healthcare vertical, albeit at a likely slower pace of growth. As such we will continue to allocate resources to expand last-mile operations and upgrade our infrastructure, including warehouses and fleets."

None too surprisingly, domestic shipments was the solid performer through the first-half, driven by online sales deliveries. Another contributor was helping meet the urgent need for healthcare-related equipment.

“Some industries which we service are still witnessing a slow recovery,” said Obeid. “The oil and gas sector has negatively impacted the performance of freight, as has the sluggish demand for traditional retail.

“While we are starting to see a modest recovery in some of our verticals, it is too soon to say with certainty that we have returned to pre-COVID-19 levels.”

The COVID-19 imposed costs
Tackling the pandemic has obviously come with higher operational costs, which in turn is hurting margins.
“While some factors pushing costs higher may dissipate or normalize over time, such as sanitization costs, others may adjust higher for an extended period, such as line-haul costs," said Bashar Obeid, CEO.
"Having said that, we have a robust balance-sheet and comfortable free cash-flow position, enabling us to manage higher costs."