Dubai: The Dubai headquarter logistics operator Aramex recorded a steep 27 per cent decline in 2022 profit to Dh165.37 million from Dh225.54 million, on revenues that came in 2 per cent lower at Dh5.92 billion.
While demand and order volumes held up in the UAE and Gulf markets, Aramex took a hit from the lockdowns in China, the ‘overall slower economic growth and lower consumer confidence as well as the global inflationary environment’. To add to that, revenues were hurt by currency devaluation in some markets, primarily in Lebanon and Egypt.
A top Aramex official was looking for the positives, which include stabilizing ‘gross profit margin for the group, as well as for our domestic and international express products’. “We grew our freight product by 27 per cent while increasing its gross profit by 51 per cent,” said Othman Aljeda, CEO. “And for our logistics product, we focused on quality revenue and reached 85 per cent utilization of our warehouses while increasing gross profit by 58 per cent.
“This was supported by the solid growth in our home markets in the GCC and other MENAT countries, which also contributed to a good performance in our main outbound markets including the US and UK.
“We now have a more diversified customer base than ever before, with no single customer making up more than 7 per cent of our revenue, thus reducing our concentration risk.”
Aramex's planned capex for next 5 years, including on acquisitions. Last year, it bought MyUS, the package delivery fir
Comes at a cost
Aramex confirmed that the financial performance has been impacted by the change in focus to 'quality revenue', leading to certain provisions and extraordinary items. If these extraordinary items were exclusded, normalized gross profit shows higher growth of 62 per cent for full year 2022, while the normalized gross profit margin significantly improved to 17.3 per cent for the same period.
"Looking ahead, our 5-year business strategy provides us with a clear roadmap to grow our business and deliver long term value for all our stakeholders," said Aljeda. "We have earmarked Dh2.4 billion in capital expenditure over the next five years to sustain our organic growth plans.
"We also have several M&A opportunities in the pipeline, as inorganic growth is a key component of our growth strategy. Our strong cash position will help us fund some of these acquisitions."