Online orders have spiked, but the pandemic still interfered with growth and profitability for Aramex. Image Credit: Gulf News Archive

Dubai: The COVID-19 spread did leave a dent on Aramex’s first quarter profit, which dropped 38 per cent to Dh67.4 million from Dh108 million a year ago. Revenue dip was lower, at 3 per cent, to Dh1.19 billion.

“Just like all businesses around the world, the onslaught of the pandemic is challenging our operations, business model and financial standing,” said Bashar Obeid, CEO.

“The road to recovery is not yet clear. There is still a lot of uncertainty around how long lockdown measures and other movement restrictions will remain in place in countries where we have significant operations.

“There is also ambiguity around shifts in consumer demand trends in a post-COVID-19 world.”

Mixed results

Aramex confirmed that in the first three months, its international express and freight forwarding were impacted, in line with the disruption in flights and supply chains after the initial Chinese virus spread turned into a pandemic.

“The general softening in demand for goods, and more complicated and costly shipment routes impacted our volumes and profit margins in those service lines,” the official said.

In its stead, Aramex derived better returns from its domestic focused services. :This is mainly because almost entire populations in countries where we have significant on the ground operations were encouraged to turn to online channels to purchase and deliver necessities, such as food and other household goods,” the CEO said.

“This has prompted major traditional retailers in our core countries to turn to Aramex to partly handle the influx of orders and deliveries and relieve pressure on their limited last mile capacities. At the same time, major e-commerce players have also increased their demand on our services to support their last mile delivery requirements.”

How the numbers stacked up for Aramex
* The cross-border express service declined 10 per cent to Dh479.4 million, mainly to significant volume drops from China and Hong Kong origins. This was because COVID-19 negatively impacted "supply chain out of those markets as well as global demand for Chinese goods". Plus, interruptions in air, rail and land routes and operations pushed line haul costs higher, adding pressure to profitability margins.

* The domestic express business was up 13 per cent to Dh289 million, due to demand from both traditional retailers and major e-commerce portals, especially in Saudi Arabia and the UAE. But while "volumes in core markets grew by 34 per cent, the cost to scale operations increased, weighing on margins".

* Freight Forwarding declined 8 per cent to Dh262.4 million. But Aramex managed to tap into improved offtake from "new verticals, including pharmaceuticals, life sciences and healthcare".

* Logistics and supply chain management saw a 12 per cent year-on-year gain to Dh95 million, as major retailer groups saw spikes in demand from online channels.