Aramex's first-quarter revenue slips amid global economic headwinds

The growth of GCC economies offers 'signs of optimism' towards the end of 2023, chief executive says

Aramex's delivery drones in Dubai. The company is confident about the GCC's economic prospects. Photo: Aramex

Aramex, the Middle East’s biggest courier company, said its first-quarter revenue slipped marginally amid global headwinds although its international express business remained resilient.

Revenue fell by 1 per cent in the first three months of the year to Dh1.43 billion ($389.3 million), from Dh1.44 billion in the same quarter in 2022, Aramex said on Thursday in a filing to the Dubai Financial Market, where its shares are traded.

Net profit in the first quarter slipped to Dh24 million, from Dh46 million, because of currency devaluation in some markets, interest expenses related to its recently-acquired e-commerce platform MyUS and softening at the topline flowing through to the bottom line, the company said.

Aramex moved into more US dollar-denominated contracts to hedge against its exposure to the negative impact of foreign exchange movements and currency devaluation in some markets, it said.

"In a quarter when our industry globally continued to face headwinds from cost inflation, base rate rises, softening shipment volumes and FX fluctuations, we ... present a stable and resilient financial and business performance for the first three months of 2023," chief executive Othman Aljeda said.

The global economy faces a "rocky" recovery as geopolitics, monetary tightening and inflation continue to weigh on growth, the International Monetary Fund said last month.

The fund lowered its global economic growth estimate for this year by 0.1 percentage points to 2.8 per cent, from what it previously projected in January, with the estimate below the 3.4 per cent expansion recorded in 2022 and the historical growth average of 3.8 per cent from 2000 to 2019.

Aramex's international express business posted a 1 per cent rise in revenue to Dh567 million, reflecting the additional volume from MyUS and attractive margins in Aramex’s parcel-forwarding unit.

The revenue of the domestic express business declined by 4 per cent to Dh362 million due to a currency exchange impact in Egypt, Lebanon, South Africa and other countries, as well as a revenue decline in the Oceania region, where a restructuring plan is in progress, Aramex said.

This was partially offset by an increase in domestic revenue from the GCC and cost management.

Freight forwarding revenue dipped 1 per cent to Dh385 million while the logistics and supply chain unit's revenue declined 5 per cent to Dh107 million.

Looking ahead, the company is bullish about growth prospects on the back of economic expansion in its home markets.

"The continued growth in the GCC economies and the expectation that inflationary pressures around the world may peak and then decline significantly show some signs of optimism towards the end of the year," Mr Aljeda said.

"We believe the key differentiator in the months ahead will be our ability to invest in technology, along with our geographic and business line diversification, which offers competitive advantage."