Dubai: The Dubai headquartered logistics company Aramex seems to be settling in for a smoother ride after passing through topsy-turvy in the last two years. In its H1-2024 numbers, Aramex pulled out a near Dh50 million net profit brought in by revenues of Dh3 billion. (This was despite Q2 proving to be quite challenging because of ‘seasonality and adverse weather effects’.)
What will be most heartening the company is the 15 per cent growth on the net profit side, while the EBITDA margin for the first-half was at 10 per cent. Of its divisions, the international express side of things served up a strong 32 per cent growth, while domestic express volumes grew 5 per cent.
Over these last 2-3 years, Aramex had been restructuring its operations and the latest financials do show the company getting those benefits.
“Costs were well managed, with the group selling, general, and administrative Expenses (SG&A) growing in line with revenue delivering a stable SG&A-to-revenue ratio of 20 per cent for both H1-2024 and Q2-2024, said Aramex in its statement on DFM.
In an interview, Othman Aljeda, Aramex CEO, talks about resilience and how the company expects to stick to the growth narrative.
The last few quarters have been exceptionally tough by way of results. You also had an ongoing restructuring. Have you finally started seeing a turnaround?
Aramex has consistently shown resilience across quarters, despite significant challenges arising from seasonal trends in demand, currency depreciations (in Egypt and Lebanon), and broader market developments.
Recent quarters - Q4-2023 and Q1-2024 - delivered record volumes for our international express as well as volume growth for all product lines. This momentum continued into H1-2024, with revenue up 8 per cent and net profit 15 per cent.
Aramex continues to hold a healthy cash position, with available cash of Dh457 million and a good net debt-to-EBITDA of 0.9x as of June 30, 2024, demonstrating our financial resilience.
This means that we are on track with our year-end targets. We estimate growth of 8-9 per cent in group revenues and an approximate gross profit margin of 24-25 per cent.
Some of your key regional markets are experiencing a bit of turmoil. And there are currency depreciations to factor in. Won’t that make H2-24 exceptionally difficult?
We closely monitor the evolving developments in the region. Our track record demonstrates our agility to adapt to market dynamics. Our ongoing investments in technology and process optimization are designed to enhance efficiencies and control costs, ensuring we are well-prepared.
We are strongly positioned to deliver resilient performance in the second half of the year, meeting our year-end targets.
Have you finally nailed down all elements of the reorganization of divisions? Was this to do with cutting out some flab?
We are rebalancing the business from a B2C express parcel driven organization to a more B2B focused operating mode. We aim to provide an end-to-end service offering to our customers through four well-defined products, namely our international express and domestic express products, as well as our freight forwarding and logistics and supply chain products.
This means we remain flexible and agile in responding to our customer’s requirements for transportation and logistics. In the entire history of our company, this has never been more relevant than today.
We continue to see an acceleration in market shifts and new industry trends, resulting in a dynamic operating environment for our company and our customers. Global supply chain diversification and rising economic uncertainties are redefining the way goods are being moved, stored, and fulfilled.
We see customers shifting from a purely international express model to a more localized model as they bring stock closer to demand centers. We on-boarded several important new customers into our warehouses in this region during the first-half of the year.
We believe that Aramex’s unique ability to provide a full spectrum of services across the logistics value chain will increasingly become an advantage vis-à-vis those competitors that are only able to provide more fragmented services.
Today, we have operations in 600 plus cities across 70 countries, where we employ over 16,000 professionals. We have leveraged our strengths and 40 plus years of history in the domestic and international express business.
There have been persistent talk about a possible strategic buyer. Any thoughts?
We do not comment on market speculation or rumors. Our focus remains on executing our strategy and delivering value to our shareholders and wider stakeholders.
What about a share buyback?
We are committed to exploring avenues that drive shareholder value and optimize our capital structure. This enables us to maintain flexibility and adaptability in navigating dynamic market conditions while striving for sustainable, long-term value creation.
Should there be any plans regarding a share buyback in the future, we will inform the market at the appropriate time. At the moment, management remains focused on improving profitability.
