Dubai: UAE-based courier firm Aramex on Monday announced net annual profits of Dh426.6 million for 2016, up 37 per cent on the previous year.
At the same time the firm’s revenues increased 16 per cent to Dh4.34 billion.
Fourth quarter net profits were up 129 per cent year on year, at Dh131.8 million, with Q4 revenues up 18 per cent at Dh1.16 billion.
Following the announcement, Aramex shares rose by nearly 9 per cent on the Dubai Financial Market to reach Dh4.5.
Aramex CEO Hassein Hachem attributed the increase in profits to improved company infrastructure, growth in online sales fuelling the small-package trade and contributions from Fastway, the New Zealand courier Aramex acquired in January 2016.
Freight hauling revenues declines by 9 per cent, he said, with increased volumes offset by lower rates.
“We are confident of our business model,” Hachem told journalists at a press conference at the St Regis Hotel, Dubai.
He said Aramex had upgraded its operations globally. “We see automation is becoming the norm,” he said, adding that Aramex saw itself as a technology company, which continued to invest in digital solutions and Big Data.
“We are working very hard globally to have a more valuable model in terms of capacity. There is a surge of online shopping activities globally. This is not only related to the region, this is across each market we operate in.
“We believe the challenge these days for companies like ours is not having the business — the business is there — it is addressing capacity. There is a global capacity crunch and Aramex is addressing that.”
Chief Operating Officer Iyad Kamal said Aramex was looking to move further from a fixed-cost model to a variable one through crowdsourcing, third-party delivery and moving its own staff onto a variable model, with a basic salary increased by number of deliveries.
Hachem said Aramex’ key focus remained on developing its business in Asia and on deliveries from online sales.
He said the firm had not reached any agreement to handle deliveries with noon.com or Alibaba, but that “any extra package that comes into the ecosystem is a good package.”
Chief Fianancial Officer Bashar Obeid predicted continued growth for 2017.
“Our strategy of diversifying out of the region has paid off well,” he said, citing growth in Asia and US eCommerce. “That definitely boosted our growth in 2016 and I think that is going to continue in 2017 with good growth numbers.
“When it comes to the B2B business, that hasn’t been so exciting in 2016” and that was likely to remain the same in the coming year, he said.
Hachem expressed frustration at the slowdown in regional business that occurred in summer and during Ramadan, saying in an interview after the conference that this forced Aramex to concentrate on Q1 and Q4 revenues. “What can we do about it? We can’t do anything,” he said.
Aramex considers scaling down UK operations post-Brexit
Aramex is considering minimising its operations in the UK and serving Europe through the Netherlands or France if Brexit agreements do not favour free trade flows.
The company would maintain a small hub in the UK but move the bulk of its operations if the UK and European Union don’t reach an agreement supporting free commerce, which is crucial to the logistics business, said CEO Hussein Hachem.
“It depends on what kind of agreement the UK government would be able to reach with the EU,” Hachem said on Monday. “The UK is a big economy. Irrespective of what happens, we need to have a presence. It’s too early to take a decision right now, but we’re mobile. It’s about customs. If that’s been addressed, we will stick around. If it’s a challenge, then we will minimise the UK hub and move somewhere else.”
- Bloomberg
