Aramex pivots to regional logistics as global express demand dips in Q1 2025

Dubai: Aramex reported flat revenues and sharply lower profits in Q1 2025 as the logistics firm continued to reconfigure its business around shifting global supply chains.

The company posted Dh1.56 billion in revenue for the quarter ending March 31, up just 1% year-on-year. But the topline stability masked a significant realignment: international express revenue fell 13%, while domestic express, freight forwarding, and logistics all posted double-digit gains.

The transformation reflects a broader shift as more businesses adopt nearshoring strategies—placing inventory closer to regional markets and cutting reliance on long-haul transport. For Aramex, that means less global parcel movement and more demand for short-haul, regional, and warehousing services.

'Continuity and change'

“This quarter reflects both continuity and change,” said Acting Group CEO Nicolas Sibuet. “As supply chains become more regional and service expectations evolve, Aramex is well placed to deliver agile, integrated solutions that meet the moment.”

Gross profit fell 8% to Dh365 million, pulling gross margins down to 23.3% from 25.7% a year earlier. EBITDA dropped 19% and EBIT was down 34% as profitability came under pressure from rising costs and a more margin-thin product mix. Reported net profit dropped 64% to Dh17 million.

The realigned product mix weighed most heavily on the core courier business. While domestic express revenue rose 13%, the drop in international express revenue led to a 3% overall decline for the courier division. Gross profit in that segment fell 13%.

By contrast, Aramex’s logistics and freight units benefitted from the regional shift. Logistics revenue jumped 21%, with warehouse utilization nearing capacity. Freight forwarding revenue rose 9%, driven by strength in land and sea freight, particularly less-than-container-load (LCL) volumes, which grew 26% year-on-year.

GCC now central to growth

The Gulf region stood out in Q1. Revenues in the GCC rose 15% and now account for 44% of total group revenue—up from 39% in the same quarter last year—further evidence of the regional pivot. Meanwhile, operations in MENAT, India, Sub-Saharan Africa, Europe, and Asia-Pacific made up the remaining share more evenly.

To adapt to the logistics landscape’s evolution, Aramex launched “Accelerate28,” a transformation program aimed at simplifying its structure and boosting efficiency. The company reorganized its operations from eight geographic zones into four and is pursuing better pricing and operational streamlining as part of the overhaul.

While the company controlled SG&A expenses—up just 1% YoY—it incurred non-operational costs tied to legal and consulting fees around its Q Logistics acquisition offer, contributing to the profit decline. Normalized net profit, excluding these one-offs, was Dh25 million, down 46% from the previous year.

Focus shifts to reinvestment

At its March AGM, Aramex shareholders approved the board’s decision to forgo dividend payouts for 2024. The company signaled a preference for reinvesting in infrastructure, technology, and performance initiatives to drive long-term value.

Looking ahead, Aramex expects the nearshoring trend to continue shaping volume flows, especially through the first half of 2025. The company says it is building capacity in key markets to meet shifting demand patterns—even if that means more short-term margin volatility.