Aramex profit hit by supply chain disruption as coronavirus bites

Company saw uplift in domestic demand from customers spending more through online channels

The new Aramex Smart service allows customers to 'Unbox First. Pay Later', 14 days after receiving a purchase. Antonie Robertson / The National

Aramex, the Middle East’s biggest courier company, reported a 38 per cent decline in first quarter profit as its international express courier and freight forwarding divisions experienced disruption due to the coronavirus pandemic.

Net profit for the first three months of the year fell to Dh67.4m from the year earlier period, while revenue slid 3 per cent to Dh1.2bn, the company said in a regulatory filing on Thursday to the Dubai Financial Market, where its shares trade.

“Just like all businesses around the world, the onslaught of the Covid-19 pandemic is challenging our operations, business model and financial standing," the company’s chief executive, Bashar Obeid, said.

"But as an essential industry operating under such difficult and stressful circumstances it has also revealed the truly heroic efforts of Aramex employees and has demonstrated the resilience of our business as evidenced by the limited impact on total revenue,” he added.

Global trade has been hit hard by the restrictions put in place to stop the spread of Covid-19. Earlier this month, the World Trade Organisation predicted global trade would fall between 13 per cent and 32 per cent in 2020, with all regions facing double-digit declines.

Aramex said its International Express business fell 10 per cent in the first quarter due to lower volumes from China and Hong Kong, as shipping routes became more costly and complicated due to the restrictions being put in place to stop the virus’s spread.

Its domestic business, however, grew 13 per cent as customers confined to their own homes used e-commerce sites more to buy goods, while traditional retailers without their own delivery mechanisms  turned to the company as a third-party provider.

Its freight forwarding division saw sales drop by 8 per cent but its logistics and supply chain management arm grew 12 per cent, again due to a spike in demand from online channels.

“The road to recovery is not yet clear,” Mr Obeid said, with uncertainties remaining on how long lockdown restrictions will remain in place and on consumer demand given the upheaval cause by the pandemic.

“Our business resilience in the face of ongoing challenges will ensure that we continue to protect shareholder value and defend our leading market position in our core markets,” he said.