Aramex, a leading global provider of logistics and transport solutions, has seen full year 2021 revenues grow 10% to record AED6.07 billion ($1.65 billion) as buoyant global e-commerce continued to drive courier business volumes.

 

Looking forward, in 2022 Aramex focuses on scaling business through optimised operating cost and capital expenditures in strategic areas to support sustainable growth of the business. Aramex forecasts continued growth in 2022 volumes and revenue at a faster pace compared to 2021. It will leverage its relationships with strategic investors such as GeoPost and Abu Dhabi Ports to drive growth.

 

Commenting on the outlook for 2022, Othman Aljeda, Chief Executive Officer, Aramex, said: “We enter 2022 with a clear strategy to deliver our growth ambitions. Our new operating model will enable us to be better prepare to capitalise on the steady global economic recovery and grow our market share within both the Logistics & Freight Forwarding and the Courier Business.”

 

Aramex expects e-commerce to sustain a good growth momentum in 2022 and beyond. That is why for its Courier Business, it will be focused on driving new trade lanes for the global e-commerce market while positioning itself as the premier last mile solutions provider to businesses of all sizes in its core markets. 

 

Aramex has the benefit of scale, and it continues to solidify its position through expansion of its ground operations and fleet in core markets. It is also focusing on a differentiated premium product offer, as well as the end-to-end solution for the customer. Moreover, it has a clear strategic roadmap for automation of handling and sortation operations which will lead to better service levels and cost savings. 

 

Aramex will continue to rely on data analytics and AI to optimise predictions, planning and route optimisation to enhance every mile of the first to last mile journey.

 

Aramex Logistics currently accounts for a little under a third of its revenues and the firm intends to grow this to approximately half of total group revenues over the next few years. Its strategic priorities will focus on investing in a greener infrastructure, optimising operational efficiencies, and strengthening its footprint in key growth markets including Egypt and KSA. Aramex will also continue to transform how it serves SMEs and startup businesses customers by providing them innovative solutions including on-the-go warehousing solutions that are flexible and quick to set up.

 

Acquisitions remain a key enabler of Aramex’s growth. To that end, the company is seeking attractive and value accretive investment opportunities in markets that will enable trade flows into Menat, and help it to further grow its global footprint.

 

Going back to last year’s figures, in Q4 2021, revenues rose 1% YoY to AED1.61 billion driven by strong performance in Logistics & Freight-Forwarding Business. FY 2021 Revenues jumped 10% YoY to a record AED6.07 billion.

 

Q4 2021 operating profit decreased 33% YoY to AED60 million. The drop in operating profit is attributed to Linehaul cost due to the continued pricing pressure higher operating costs as the Company continued to scale operations to cater to higher demand and Covid-19 induced costs and capacity constraints. FY 2021 operating profit declined 23% YoY to AED307 million.

 

Q4 2021 net profit fell 21% to AED46 million compared to AED59 million in Q4 2020. FY 2021 net profit decreased by 15% to AED225 million, compared to AED267 million in FY 2020. 

 

Focusing on working capital, Aramex maintained a strong balance sheet with a negative net debt position of AED452 million, supported by a solid cash balance as at December 31, 2021.

 

Captain Mohamed Juma Alshamsi, Chairman of the Board of Directors of Aramex, said: “In 2021, we witnessed a significant progress in the pace of recovery of the global economy, while businesses reconfigured operating and business models to adapt to the repercussions of the pandemic. The gradual reopening of the global economy in the second half of the year underpinned by the strong progress made by countries in implementing national vaccination campaigns and other related measures, spurred economic growth and improved business performance and customers confidence levels.

 

“At Aramex, we continued to provide our customers with best services levels, and continued to promote our crucial role in enabling cross border trade. We are also proud of the key role we played in providing the necessary infrastructures and processes for safely distributing Covid-19 vaccines. We continue to dedicate resources to support countries around the globe with their vaccine campaigns, further supporting their recovery.

 

“Our market leading position and strong reputation has attracted an international peer, GeoPost, to become a strategic investor in Aramex. Their investment is a testament to the significant growth opportunities that Aramex is well positioned to capture in the mid to long term. As we look forward, we plan to continue exploring multiple synergistic opportunities and our focus on creating value for our shareholders and all our stakeholders.”

 

Aljeda said: “2021 demonstrated our ability to capture growth opportunities spurred by a buoyant e-commerce market and good recovery in certain industries, while simultaneously implementing a fully redesigned operating model. The Logistics and Freight-Forwarding business produced outstanding results in a short period of time, and we continued to capture greater market share in the Domestic Express business despite an increasingly crowded last mile delivery sector in our core markets.

 

“Our customer-first approach means we are absorbing a higher cost of doing business to ensure we continue to respond to customer needs, defend and grow our market share, despite the ongoing supply chain disruptions caused by the pandemic. As a result, our margins remain under pressure. While the pressures will likely continue in 2022, we have a defined strategy to grow the business and improve the profit margins. This includes investment in technology and operational optimisation initiatives to strengthen and grow our business across all markets.”

 

BUSINESS PERFORMANCE HIGHLIGHTS

Courier Business: Aramex’s courier business includes International Express and Domestic Express offers delivery and last mile solutions serving the B2B and B2C customer base including Shop & Ship, e-commerce, FMCG, SMEs and others.

 

In Q4 2021, the Courier Business fell 12% YoY to AED1.0 billion. The decline is partly attributed to a slowdown in both International and Domestic Express business compared to 2020, which was an exceptionally busy period due to Covid-19 related travel restrictions and lockdowns. FY 2021, the Courier Business grew 5% YoY to AED4.14 billion driven by accelerated growth in the global e-commerce market. FY 2021 volumes for the business increased 10% YoY.

 

Gross profit margins declined predominately driven by Covid-19 induced costs and disruptions including higher linehaul costs and airline capacity constraints. The business also incurred higher costs related to scaling operations and boosting capacity.

 

International Express (including Shop & Ship):

In Q4 2021, International Express business witnessed a 16% YoY decline to AED671 million and a 16% drop in volumes on the back of significantly reduced demand from Asia, notably Hong Kong and China into the GCC. For FY 2021, the cross-border business increased 3% YoY, and shipment volumes increased by 4%.

 

Domestic Express: In Q4 2021, Domestic Express declined 4% to AED372 million as volumes witnessed 6% YoY growth. The lower revenue and higher volume are mainly attributed to intensifying competition in the last mile delivery in some of our core markets. However, for the 12-month period, Domestic Express increased 9% to AED1.49 billion versus FY 2020 driven by strong growth in KSA, UAE, Egypt and Australia from e-commerce and banking verticals while volumes rose 12% YoY.

 

Alaa Saoudi, Chief Operating Officer – Express, said: “Over the course of the year, we invested in expanding our operations in key markets, including Riyadh, where we built and are operating a fully automated warehouse. We continue upgrading and automating existing facilities and are using data analytics and AI to better plan for peak shopping periods and flex our capacity accordingly. While we are seeing intensified competition from new market entrants, especially in the last mile, our scale and industry expertise will continue to solidify our market leading position and our product innovation will continue to give us a differentiated edge to service customers of all types and sizes.”

 

Logistics & Freight Forwarding: Aramex’s Logistics & Freight Forwarding business includes air freight, sea freight, land freight, and warehousing and distribution solutions. It serves B2B customer base across multiple industries including oil and gas, healthcare and pharmaceutical, aerospace, retail and fashion, amongst others.

 

In Q4 2021, this business unit jumped 32% YoY to AED504 million on the back of strong demand from the oil and gas, retail and fashion and healthcare sector. The business was able to capitalise on growth opportunities thanks to the redesigned operating model.  In FY 2021, top line grew 21% YoY to AED1.76 billion driven by a rebound in global economic activity.

 

Gross profit margin improved, driven by swift adoption of operational optimisation initiatives.  

 

Freight-Forwarding: Freight Forwarding surged 40% YoY to AED391 million in Q4 2021, predominantly driven by strong recovery in business activity across oil and gas, retail & fashion, and healthcare sectors. For FY 2021, this service line increased 22% YoY Revenue to AED1.33 billion. 

 

Integrated Logistics & Supply Chain Solutions: Integrated Logistics & Supply Chain Solutions witnessed a 12% increase to AED113 million in Q4 2021, on the back of increased demand from business activity in Saudi, Egypt, UAE and Morocco driven by the retail and fashion sector. For FY 2021, this service line climbed 16% YoY to AED435 million as an increasing number of consumer businesses expanded their reach through e-commerce platforms. 

 

Mohammad Alkhas, Chief Operating Officer – Logistics & Freight-forwarding, said: “We ended the year on a strong footing. By operating within a more decentralised model, we were able to service a new and growing number of customers, offering more innovative solutions to capture pockets of growth and capitalise on the steady recovery in certain industry verticals including oil and gas and retail and fashion. We also strengthened our capabilities with the addition of industry experts and technology investments to capture greater market share. Despite the Covid-19 induced disruptions to the global supply chains, our commitment to operational optimisation supported margin growth, and our commitment to integrating sustainability measures within our operations means we are operating at greener levels.”-- TradeArabia News Service