Aramex's Q4 profit more than doubles on record international express volumes

Logistics company 'closely monitoring' Red Sea shipping crisis to provide clients with alternative solutions in region

Markets in the GCC and Menat region accounted for half of Aramex's group revenue. Silvia Razgova / The National

Aramex, the Middle East's largest courier company, said its fourth-quarter profit more than doubled on record quarterly volumes at its international express unit, as well as strong growth in the GCC and broader Middle East, North Africa and Turkey markets.

Net profit for the three months to the end of December rose 127 per cent on an annual basis to Dh76.7 million ($20.9 million), Aramex said on Friday in a filing to the Dubai Financial Market, where its shares are traded.

Earning before interest, taxes, depreciation and amortisation in the final quarter of 2023 rose 33 per cent year-on-year to Dh197.4 million on tighter cost management and operational efficiencies.

However, revenue during the reporting period declined 1 per cent to Dh1.52 billion amid softer growth from other businesses owing to challenging market conditions and currency fluctuations, the Dubai-based company said.

Markets in the GCC and Menat region accounted for half of Aramex's group revenue.

The fourth quarter "has proven to be exceptional, marked by record quarterly international express volumes and improved profitability for the group. This is driven by client wins, operational excellence and the strength of our home markets in the GCC and wider Menat region", Aramex chief executive Othman Aljeda said.

The robust performance came "despite persistent challenges in the operating environment globally", he added.

Companies in the global logistics sector have been tackling increased uncertainty as attacks by Yemen's Houthi rebels on commercial vessels in the Red Sea continue, forcing manufacturers to find alternative supply routes.

Ocean freight rates have soared and shipping delays are on the rise as shippers are choosing to sail the longer route around Africa's southern tip at the Cape of Good Hope. Some manufacturers and retailers have also opted to move their goods by plane instead.

Aramex said it was "closely monitoring" the current Red Sea shipping disruption and was using its trucking fleet in the region to provide its customers with alternative solutions.

"We are deploying our trucks via Dubai, UAE, and via Dammam, Saudi Arabia, for the onwards journey of shipments arriving from Asia and via Port Said, Egypt, for the onward journey of shipments arriving from Europe," Mr Aljeda said.

While Aramex's international express volumes reached record quarterly highs, its other units recorded softer revenue growth.

International express shipment volumes in the fourth quarter grew 31 per cent year-on-year to 7.6 million shipments. The unit's revenue rose to Dh656 million, an 8 per cent growth over the same quarter in 2022.

"International express benefitted from new client wins, with significant growth in volumes and healthy improvement in profitability," Mr Aljeda said.

However, Aramex's freight-forwarding unit recorded a 9 per cent annual drop in revenue to Dh383.9 million, due to a decline in global freight rates, the company said.

While the company's air freight shipping volumes grew 3 per cent, its sea freight shipments for 40-foot shipping containers declined 8 per cent.

Aramex's domestic express unit posted a 4 per cent year-on-year decline in revenue to Dh361.7 million as shipment volumes remained flat amid "softened retail activity worldwide", the company said.

Aramex's full-year net profit attributable to equity holders of the company declined to Dh129.2 million, from Dh165.3 million in 2022, as revenue for the 12-month period dropped 4 per cent to Dh5.69 billion.

A rise in finance costs and the effect of currency swings dented the company's annual profit, Aramex said.