Aramex Announces Record Revenues for 2020
Chairman Alshamsi forsees future consolidation with "technology-powered logistics"
Announcing his company's results for FY 2020 Captain Mohamed Juma Alshamsi, Chairman of Aramex said: "We anticipate a consolidation of market participants, creating stronger, more efficient, and technology-powered logistics service providers that are better able to offer customized solutions."
For FY 2020, Aramex’s Revenue was $1.5 billion, the highest Revenue on record and a 9% increase versus FY 2019.
In Q4 2020, revenue increased 13% to $435 million, compared to $386 million reported in Q4 2019. This also marks the Company’s highest fourth quarter Revenue on record.
Q4 is typically a busy shopping season and with more and more consumers turning to e-commerce to buy goods and gifts due to travel and other COVID-19 related restrictions, this supported Aramex’s top line growth for the three-month period.
In 2020, the Company’s cost base witnessed an unexpected increase as line haul costs – costs associated with long distance transportation – rose and the cost to scale last mile operations to accommodate the surge in Express volumes from e-commerce also increased.
There was an increase in other costs related to COVID-19, including Personal Protective Equipment (PPE) for Company employees and sanitization of facilities and fleet.
Combined, these higher expenditures ultimately weighed on FY 2020 EBITDA margins, which came in at 13.8%, down from 18.2% in FY 2019. In addition to the higher cost base in Q4 2020, EBITDA margins were weighed by non-core and one-off provisions.
$5 million was additionally booked in Q4 2020 in relation to warehouse fire incident incurred in Q3 2020 and $5.8 million in estimated credit loss on the Company’s bank deposits in Lebanon, a prudent provision in light of the deteriorating liquidity and banking conditions in that country.
For FY 2020, Net Income was $77.6 million, down by 42.7% from $135 million for the year ago period, and normalized Net Income for the period was $103 million, down 24.1% year-on-year.
Despite the increase in costs and after accounting for provisions, Aramex remains in a very strong cash position thanks to prudent financial management.
At the end of 2020, Aramex’s total cash stood at $342 million and free cash flow of $120 million.
Captain Mohamed Juma Alshamsi said: “In 2020, Aramex demonstrated its operational resilience and agility to respond swiftly to fast-changing operational conditions thanks to our strong digital infrastructure, robust financial position, experienced management team and the incredibly determined people that were on the ground getting the job done.
"Moreover, over the last 12 months, Aramex reinforced its reputation as a trusted brand that can deliver high levels of service in a reliable, safe and timely manner under unprecedented circumstances.
"As the global economy recovers from the pandemic and the global vaccination drive gathers pace, we are optimistic about the future of our industry.
"Demand-side fundamentals are encouraging as more and more businesses will depend on us to move and deliver shipments globally and domestically."
Bashar Obeid, Chief Executive Officer of Aramex, said: “Throughout the year we remained focused on executing on both the digital transformation roadmap, to enhance operational efficiencies and service levels, and on our commercial strategy, to diversify revenue and expand our B2B business.
"On the digital front, we invested in several technologies with a strategic focus on further improving consumer experience and supporting the growth of the B2B segment.
"In 2020, we also remained focused on executing on several Sustainability initiatives including testing electric vehicles in Saudi Arabia and commissioning the second solar farm in Dubai to power our warehouses."
Commenting on the outlook for 2021, Bashar Obeid said: “Going into 2021 Aramex will have an increased focus on servicing the healthcare and FMCG segment and we will double down our investment in operations and relevant technologies to service those defensive segments."