Aramex Delivers Double-Digit Net Profit Growth in H1 2024 Despite Seasonal Challenges
Dubai, UAE: Aramex (DFM: ARMX) a leading global provider of comprehensive logistics and transportation solutions, announced its financial results for the second quarter (“Q2”) and first half (“H1”) ending 30 June 2024.
Q2 2024 was expected to be a softer quarter for the company, impacted by seasonality and loss of productive days. The impact was further amplified due to adverse weather conditions in the UAE causing operational disruptions and slowdowns in business and consumer activity for nearly a week.
This year, the Ramadan season was observed entirely in Q1, resulting in Q2 not benefiting from the peak festive demand and increased consumer spending seen in Q2 2023 in several markets.
Additionally, the two public holidays (Eid al-Fitr and Eid al-Adha) in Q2 2024 with extended vacation days resulted in slower business activity overall, and in fewer operational working days across different countries.
The loss of productive days and the seasonality impact in Q2 2024 is estimated at approximately AED 45 million in lost revenues and AED 8.8 million in lost net income for Q2 2024 for the Group.
Therefore, due to the impact and shift in seasonality between these quarters, it is more relevant to look at the half year performance in 2024 as an indication of this year’s financial situation and progress compared to last year.
Othman Aljeda, Chief Executive Officer of Aramex, said: “We are pleased to report a good performance in the first half of 2024, which underscores our strategic focus on growth. We delivered a healthy revenue growth of 8% YoY and a Net Profit increase of 15% YoY in H1 2024, despite a challenging Q2 2024. We are proud of the dedication and hard work of our Aramexians, spearheading this robust performance. We expanded our customer base and delivered solid volume growth across our product lines, reinforcing our stronghold and leadership position in our key markets.”
Aljeda added, “Both International Express and Domestic Express achieved significant volume growth while maintaining strong service standards. Freight Forwarding navigated a complex operating environment, delivering good growth in volumes for the first half of the year. Our Logistics business successfully onboarded new customers in its warehouses during H1 2024 and replaced legacy accounts.
“We are monitoring the regional developments and Red Sea complexities closely. Despite the recent global macroeconomic headwinds and the regional disruptions, we are robustly positioned to deliver resilient performance in the second half of the year and achieve our year-end targets.
“We remain committed to demonstrating the resilience and adaptability of our strategies to market dynamics and creating long-term value for our stakeholders. We will continue our investments in critical projects, ensuring we are well-prepared to capitalize on growth opportunities. Looking ahead, we are confident in our ability to deliver quality service and enhance operational efficiency to meet the evolving needs of all our customers.”
Financial Performance Commentary
In line with expectations, in the first half (H1) of 2024, Aramex saw strong revenue contribution from all products with revenue growing by 8% year on year (YoY) in H1 2024 driven by new customer wins and an increased focus on sales specialism. The performance was further supported by impressive volume growth of 32% in International Express, 5% in Domestic Express along with strong growth in freight volumes in H1 2024. Revenue performance in Q2 2024 maintained positive momentum, also recording an 8% increase, compared to Q2 2023.
The Company posted an increase of 5% YoY in Gross Profit in H1 2024 to AED 741 million, and a stable Gross Profit of AED345 million in Q2 2024. The Gross Profit margin was healthy at 24% in H1 2024 and at 23% in Q2 2024.
Costs were well managed, with the Group Selling, General, and Administrative Expenses (SG&A) growing in line with revenue delivering a stable SG&A-to-revenue ratio of 20% for both H1 2024 and Q2 2024.
Q2 2024 was expected to be a softer quarter for the company, impacted by seasonality. EBIT declined 11% to AED 47 million. Furthermore, Q2 2024 net profit declined to AED 2.9 million, impacted by 1) approximately AED
8.8 million from seasonality and adverse weather effects and 2) negative FX impact of AED 5.1 million coming primarily from the devaluation of the Egyptian pound.
