Aramex CEO Bashar Obeid said, “Shipments in 2020 will continue to grow healthy, especially in core markets such as Saudi Arabia, but the price pressure on e-commerce business will continue for some time.

This article comes from WeChat public account “ePanda to the Middle East” (ID: ePandaMENA) .

We have previously published a document, A summary of Aramex’s movements over the past year and its announced third quarter financial results Analysis . Today, let’s take a look at the changes in the Middle East e-commerce logistics industry through Aramex’s fourth quarter earnings report.

Aramex (DFM: ARMX), a logistics service provider in the Middle East, recently released financial data for the fourth quarter of 2019 (as of December 31) and the full year. The key data are as follows:

  • Total revenue in 2019 was AED 5.246 billion (approximately US $ 1.428 billion), an increase of 3% compared to 2018; net profit for fiscal year 2019 Was 497.4 million dirhams (approximately $ 135 million), an increase of 1% compared to 2018;

    • In the fourth quarter of 2019, the revenue was AED 1.463 billion (approximately US $ 398 million), an increase of 3% compared with the same period in 2018; Net profit in the fourth quarter was Dh152.5 million (US $ 42 million), a decrease of 1% from the same period last year.

      • As of the end of 2019, Aramex’s total cash was AED 1 billion and free cash flow was AED 294 million.

        Freight forwarders and international courier are facing fierce competition

        Aramex said that the challenges in 2019 come from two aspects. One is global and persistent regional economic uncertainty. Aramex’s freight forwarding business for the year fell by 2% to 1.138 billion dirhams, and in 2018 For Dh 1.164 billion.

        The other is that e-commerce has been developing dynamically. Competition from China and Hong Kong is becoming more and more fierce, which puts more pressure on the pricing of Aramex’s e-commerce business.

        The fourth quarter of 2019, ARamex’s international express delivery sales fell 4% to AED 673 million, compared with AED 702 million in the fourth quarter of 2018. However, sales volume is actually increasing, and the total sales decrease is due to the decline in the prices of e-commerce businesses in Asia (especially China and Hong Kong) due to competition.

        Across the year, Aramex’s international express delivery business increased by 3% to AED 2.349 billion, compared with A $ 2.273 billion in 2018. The main growth areas came from the United States, the United Kingdom, Singapore and Saudi Arabia.

        Despite the challenges, the financial data for 2019 is relatively optimistic, mainly because Aramex has invested heavily in last-mile operations, focusing on upgrading operations.

        In addition to guaranteeing the leadership position of the last mile in the core market, it is also undergoing business transformation, encouraging accelerated growth of B2B business lines (such as fashion retail, telecommunications, manufacturing, chemicals and healthcare) to achieve a revenue mix Diversification.

        Domestic express, logistics and supply chain businesses continue to grow

        Compared with the 270 million UAE Dirhams in the fourth quarter of 2018, the revenue of domestic express delivery companies has increased by 20% to A $ 324 million. Mainly double-digit growth in core markets (especially Saudi Arabia, Egypt and the UAE). Excluding the Indian business restructuring (Aramex’s Indian business has been sold to local company Delhivery) and the effects of exchange rate fluctuations, domestic express delivery will grow by 26%.

        In Aramex’s core markets, domestic express shipments have increased by 27% compared to 2018 due to strong growth in Saudi Arabia and Egypt. Domestic Express’s full-year turnover in 2019 was AED 1.108 billion.

        Aramex’s logistics and supply chain management business increased by 15% in the fourth quarter of 2019 to AED 97 million, compared with AED 84 million in the same period of 2018, which is also due to the company’s main markets, especially the UAE And the results of business growth in Saudi Arabia. The growth momentum comes from the online transformation of more traditional retailers, competing with pure e-commerce companies.

        Due to the strong demand for traditional retailer warehousing and other value-added services, the logistics and supply chain management business increased by 18% for the year to AED 355 million (Dh 302 million in 2018).

        Prospects for 2020

        Aramex CEO Bashar Obeid said, “Shipments in 2020 will continue to grow healthily, especially in core markets such as Saudi Arabia, but the price pressure on e-commerce business will continue for some time.

        Our work in 2020 will focus on accelerating business transformation across different areas of the company to achieve synergies and reduce the cost of doing business locally. We will also continue our aggressive business restructuring process, prioritizing the B2B sector to ensure we have a diversified revenue mix. “

        Edit | Du Jun @ 出海

        Picture | Visual China

        From the Aramex financial report to see the changes in the e-commerce logistics industry in the Middle East

        From the Aramex financial report to see the changes in the e-commerce logistics industry in the Middle East