Aramex’s net profit growth is minimal and not as good as expected.
This article is from WeChat public account “ePanda goes to the Middle East” (ID: ePandaMENA).
Aramex recently announced its third quarter financial results (as of September 30, 2019). The key data is as follows:
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The income from 2019 to September 30 was 3.782 billion dirhams (about 1.03 billion US dollars), an increase of 3% from the same period last year of 3.661 billion dirhams (about 1 billion US dollars); /p>
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In the third quarter of 2019, revenue increased by 2% to 1.27 billion dirhams (about 350 million US dollars), compared with 1.239 billion dirhams (about 3.37 dollars) in the same period last year;
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The net profit increased by 1% in the third quarter of 2019 to reach 113.8 million dirhams (about $30.99 million), compared with a net profit of 112.9 million dirhams (about $30.74 million).
It can be seen that Aramex’s net profit growth is very small, not as expected, there are several reasons:
1. E-commerce logistics business is the focus of Aramex’s development in recent years, but the field is facing downward pressure on prices.
The price decline is related to the development of the entire industry. A few years ago, Aramex was the only logistics company in the Middle East that could do e-commerce COD (cash on delivery), but with the booming development of middle and northeastern e-commerce, major logistics companies began to pay attention to this business, but also surged. A series of startups such as Fetchr, under the competition, the cost of logistics is getting lower and lower, and correspondingly, Aramex’s profits are getting lower and lower.
2. Continue to invest in the last mile of delivery business
In the third quarter, Aramex’s integrated logistics and supply chain solutions business grew 17% year-on-year due to increased demand from oil and gas customers and rapid growth in online sales of major retailers in the Middle East and North Africa region. , resulting in a strong demand for warehousing, sorting and final mile delivery solutions.
Aramex’s e-commerce model has been transferred from international to domestic, so domestic express delivery volume has increased by 29%, while demand for the last mile has increased.
So in the third quarter, Aramex focused on technology investments in the first and last mile operations to improve operational efficiency. For example, in the third quarter, startSet up three new warehouses in Saudi Arabia to deal with Saudi import and export and increase in domestic cargo; Aramex also upgraded the automation system in New York warehouses in the Middle East to simplify sorting, packaging and packaging from North America to the Middle East. Transportation time.
3. Due to regional economic uncertainty, freight forwarding business volume declined
Aramex’s freight forwarding business fell by 6% in its second-quarter earnings. Aramex said the decline was due to economic uncertainty in the region. Since 2019, economic growth has slowed in the Middle East and North Africa, and OPEC countries are rapidly implementing voluntary reductions in oil production. The decline in oil production will lead to a sharp drop in GDP growth in oil exporting countries.
Aramex’s year-to-year trend:
1. In January 2019, acquired Saudi TAL for $80 million
Saudi TAL has one of Saudi Arabia’s first five express clearance licenses, and Aramex’s express clearance in Saudi Arabia has been working with Saudi TAL. In January 2019, Aramex acquired Saudi TAL for $80 million.
2. Open to foreign investors
In March 2019, Australia Post sold the shares of Aramex held. Aramex is a company listed on the Dubai financial market. The region requires foreign ownership of no more than 49%. Before Australia Post divested Aramex shares, the stock has reached the upper limit of foreign shareholding. This opened the way for more investors outside the Gulf to buy the stock.
3. More than 1,000 Saudi nationals join the Aramex crowdsourcing platform
In May 2019, Aramex announced that more than a thousand Saudi nationals had signed up to join Aramex Fleet, a crowdsourcing platform in Saudi Arabia. The plan was launched at the end of 2018 to solve the problem of insufficient drivers in the peak season and to provide flexible jobs for Saudi nationals.
Crowdsourcing drivers don’t need to go to work during the off-season, but once the business peaks, Aramex will inform them to participate in the dispatch.
编 | 云晞@出海
